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  • Demand Analysis

    Загружено:

    Amit Gupta
    115 просмотров10 страниц
    This document defines demand and discusses the key elements, types, determinants, and exceptions to the law of demand. It can be summarized as follows: Demand is the quantity of a product that consumers are willing and able to purchase at a given price, time, and other factors. The main elements are want, money availability, and willingness to buy. Demand can be direct for final goods or derived for capital goods. It also varies based on whether goods are recurring, replacement, complementary, or competing. Demand is determined by price, income, substitute/complement prices, tastes, expectations, population, and advertising. The relationship between demand and its determinants can be shown in a demand function. The law of

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    Demand analysis

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    This document defines demand and discusses the key elements, types, determinants, and exceptions to the law of demand. It can be summarized as follows: Demand is the quantity of a product that consumers are willing and able to purchase at a given price, time, and other factors. The main elements are want, money availability, and willingness to buy. Demand can be direct for final goods or derived for capital goods. It also varies based on whether goods are recurring, replacement, complementary, or competing. Demand is determined by price, income, substitute/complement prices, tastes, expectations, population, and advertising. The relationship between demand and its determinants can be shown in a demand function. The law of

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    © All Rights Reserved
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    115 просмотров10 страниц

    Demand Analysis

    Загружено:

    Amit Gupta
    This document defines demand and discusses the key elements, types, determinants, and exceptions to the law of demand. It can be summarized as follows: Demand is the quantity of a product that consumers are willing and able to purchase at a given price, time, and other factors. The main elements are want, money availability, and willingness to buy. Demand can be direct for final goods or derived for capital goods. It also varies based on whether goods are recurring, replacement, complementary, or competing. Demand is determined by price, income, substitute/complement prices, tastes, expectations, population, and advertising. The relationship between demand and its determinants can be shown in a demand function. The law of

    Авторское право:

    © All Rights Reserved
    Скачайте в формате PPT, PDF, TXT или читайте онлайн в Scribd
    Отметить как неприемлемый контент
    из 10

    Demand Analysis

    Meaning of Demand
    Demand is that quantity of a product which a

    consumer wants to buy at a fixed price and at


    a fixed time, when other things being remain
    same.

    Elements of Demand
    Want/desire
    Availability of money
    Readiness/promptness to buy

    Types of Demand
    Direct and Derived Demand

    Direct demand is for the goods as they are such as Consumer


    goods
    Derived demand is for the goods which are demanded to
    produce some other commodities; e.g. Capital goods

    Recurring and Replacement Demand

    Recurring demand is for goods which are consumed at frequent


    intervals such as food items, clothes.
    Durables are purchased to be used for a long period of time

    Wear and tear over time needs replacement

    Complementary and Competing Demand

    Some goods are jointly demanded hence are complementary in


    nature, e.g. software and hardware, car and petrol.
    Some goods compete with each other for demand because they
    are substitutes to each other, e.g. soft drinks and juices.

    Determinants of Demand
    Price of the product
    Income of the consumer
    Price of related goods

    Substitutes
    Complements

    Tastes and preferences


    Expectation of future price changes
    Population
    Advertising

    Demand Function
    Interdependence between demand for a product and its

    determinants can be shown in a mathematical functional


    form
    Dx = f(Px, Y, Py, T, A, N)

    Independent variables: Px, Y, Py, T, A, N


    Dependent variable: Dx
    Px: Price of x
    Y: Income of consumer
    Py: Price of other commodity
    T: Taste and preference of consumer
    A: Advertisement
    N: Macro variable like inflation, population growth, economic
    growth

    Law of Demand
    A special case of demand function which shows relation between
    price and demand of the commodity
    Dx = f(Px)
    Other things remaining constant, when the price of a commodity
    rises, the demand for that commodity falls or when the price of a
    commodity falls, the demand for that commodity rises.
    Price bears a negative relationship with demand

    Point on
    Demand
    Curve

    Price (Rs
    per cup)

    Demand
    (000
    cups)

    15

    50

    20

    40

    25

    30

    30

    20

    35

    10

    Price of Coffee [Rs per cup]

    Demand Schedule and Individual


    Demand Curve

    e
    35

    d
    30

    c
    25

    b
    20

    15
    O

    10

    20

    30

    40

    Quantity of coffee

    50

    Change in Demand

    Due to change in price


    Due to change in other
    factors

    Exceptions to the Law of Demand


    Law of demand may not operate due to the following
    reasons:
    Giffen Goods
    Demonstration Effect
    Bandwagon effect
    Future Expectation of Prices (Panic buying)
    Addiction
    Neutral goods

    Life saving drugs


    Salt

    Amount of income spent


    Match box

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