Law of Demand and Market demand

1. Law of Demand
‫طلب‬ ِ‫انون‬‫ق‬
Shakeel Ahmed Qureshi

2. Demand
‫طلب‬
The quantity of a good which a consumer is ready to purchase at
a specific price is called demand of the good.
In economics demand means
• Willingness to purchase.
• Power to purchase.
Demand ‫طلب‬
Derived Demand
‫طلب‬ ‫ماخوذ‬
When a product is demanded due to the demand of the other
product, then is called the derived demand. e.g. Electricity is
demanded due to the demand of electrical appliances, Labour is
demanded due to the demand of goods.
Joint Demand
‫طلب‬ ‫مشترک‬
When two goods are demanded together to satisfy one is called
the joint demand.
Composite Demand
‫طلب‬ ‫مرکب‬
The demand of a product which is used in various industries is
called the composite demand.

3. Law of Demand
‫طلب‬ ِ‫انون‬‫ق‬
Definition:
‫تعریف‬
Keeping all other factors constant, when the price of any commodity increases its
demand decreases and when price decreases its demand increases.
Qd = f(P)
Qd = a – bP

4. Law of Demand
Assumptions:
‫مفروضات‬
• Income is Constant: There should be no change in income otherwise rise in price will
not cause the reduction in the quantity demanded.
• No Change in fashion, Taste, Weather: There is no change in the fashion, taste,
weather.
• No Substitutes: Price of the substitutes remains constant and no new substitute is
introduced.
• No change in Population: It is assumed that population remain same.
• Future Expectation: Sometime people expect that the price of a particular commodity
will rise in near future. So they increase their purchase with the rise in price.

5. Law of Demand
P Qd
5 10
4 20
3 30
2 40
1 50
Table:
‫گوشوار‬‫ہ‬
P
Qd
1
2
3
4
5
10 20 30 40 500
D
D
a
b
c
d
e
Diagram
‫شکل‬

6. Law of Demand
Negative Slope of Demand Curve
‫ج‬‫منفی‬ ‫کا‬ ‫طلب‬ ‫خط‬‫ھ‬‫کاؤ‬
1) Income Effect:
2) Substitution effect:
3) Entry of new buyer:
Exceptions
‫مستثنات‬
1) Too cheap goods
2) Too expensive goods
3) Inferior goods
4) Ostentation goods
Criticism
‫تنقید‬
1. Change in Income
2. Change in fashion, Taste, Weather
3. Substitutes
4. Increase in Population
5. Change in Future Expectation

7. Market Demand
The market demand is a sum of the quantity of a good that all consumers in
a market are demanding at a given price. There is an inverse relationship
between the price and the quantity demanded. The graphical
representation of demand schedule is called a market demand curve.
Definition

8. Market Demand
Price in Rs. Demand of
Consumer A
Demand of
Consumer B
Demand of
Consumer C
Demand of
Consumer D
Market
Demand
10 1 2 4 5 12
5 3 4 9 10 26
A
A
B
B
C
C
D
D
Dm
Dm
10
5
0
2 4 6 8 10 12 14 16 18 20 22 24 26
P
Qd

9. Law of Demand
Shakeel Ahmed Qureshi