it deals demand ans supply.

1. N.DHINAKARAN
ASSISTANT PROFESSOR OF ECONOMICS
VIVEKANANDA COLLEGE
TIRUVEDAKAM WEST
MADURAI
Course Title : General Economics-I
Course Code: 01AT01

2. UNIT-II
Demand Analysis: Meaning- Types-Determinants-Law
of Demand- Exceptional Demand Curve-Law of
Supply-Determinants

3. DEMAND
• Meaning of Demand:
• Demand for a commodity is the desire to buy a commodity backed
with sufficient purchasing power and the willingness to spend.
• For example you desire to have a mobile phone, but do not have
enough money to buy it. Then , this desire will remain just a wishful
thinking; it will not be called demand. And if in spite of having enough
money, you are not willing to spend it on mobile phone demand does
not emerge. So the demand for a commodity depends on strong desire,
purchasing power and willingness to pay.

4. DEMAND
1. Strong Desire
2. Purchasing Power 3. Willingness to Pay

5. Quantity Demanded:
Quantity demanded refers to a specific quantity to be purchased against a specific
price of the commodity.
Demand Schedule:
Demand schedule is a table which shows the relationship between price and
quantity demanded of a commodity.
Demand Curve.
Demand curve is a graphic presentation of demand schedule showing inverse
relationship between price and quantity demanded of a commodity.
Normal Goods:
Normal goods are those in case of which there is a positive relationship between
consumer’s income and quantity demanded. Implying that income effect is
positive.

6. • Inferior Goods:
• Inferior goods are those goods in case of which is a negative relationship between
consumer’s income and quantity demanded. Implying that income effect is negative.
Giffen Goods.
Giffen goods are those inferior goods in the case of which there is a positive
relationship between price and quantity demanded.
The slope of demand curve for Giffen Goods
The slope of demand curve for Giffen Goods is upward sloping, indicating positive
relationship between price and quantity demanded of a commodity.
Substitutes Goods:
Substitute goods are those goods which can be substituted for each other.
Complementary Goods:
Complementary goods are those goods which complete the demand for each other.

7. TYPES OF DEMAND
A. Price Demand
B. Income Demand
C. Cross Demand

8. Determinant of Demand for a Commodity or Reasons for change in Demand:
• Change in Income
• Change in Taste and Preference
• Change in Fashion and Customs
• Change in the Distribution of Income and Wealth
• Change in Substitutes
• Population of the Country
• Prosperity and Depression
• Price of the Product
• Expectation of Future Changes in Prices
• Demonstration Effect
• Change in Taxation
• Change in Climate
• Change in the Availability of Credit
• Advertisement Expenditure
• Changes in Savings:

9. Assumptions of Law of Demand
• 1. The income of the consumer remains constant.
• 2. The taste, habit and preference of the consumer remain the same.
• 3. The prices of other related goods should not change.
• 4. There should be no substitutes for the commodity in study.
• 5. The demand for the commodity must be continuous.
• 6. There should not be any change in the quality of the commodity.
• 7. No change in size and composition of population

12. Reasons for Exceptional Demand Curve
1. Necessaries
2. Giffen Paradox
3.Veblen or
Demonstration
Effect
4.Speculation
5.Fear of
Shortage
6.Ignorance
Effect

13. SUPPLY
Meaning:
Supply means the quantity of output that a seller is willing to and able to
sell at different prices.
Law of Supply:
The law of supply is “ other things remaining the same, as the price
of a commodity rises, its supply is extended, and as the price falls,
its supply is contracted.”

14. Law of Supply Schedule and Diagram
PRICE ( in ₹ ) NO . OF COMMODITIES SUPPLIED
1 10
2 20
3 30
4 40
5 50

15. Assumptions of Law of supply:
• There is no change in the price of the factors of production
• There is no change in the technique of production
• There is no change in the goal of firm
• There is no change in the price of the related goods
• There is no change in the business expectations
• The Government policy relating to price and production of the commodity
does not change

16. • 1. Price of the Commodity
• 2.Price of Substitutes
• 3. Price of the factors of Production
• 4. Objectives of the Firms
• 5.Production of Technology
• 6.Political conditions
• 7.Government Policy
• 8.Industrial Peace
• 9.Natural Factors
• 10.Numbers of producers
• 11.Future Price
• 12.Improvement in Transport
• 13.Monopoly
FACTORS DETERMINING THE SUPPLY OF A COMMODITY

17. THANK YOU