BASIC ANALYSIS OF

DEMAND AND SUPPLY

 EXPLANATION OF DEMANDS AND
SUPPLY
DEMAND
 Demand is an economic principle
referring to a consumer's desire to
purchase goods and services and
willingness to pay a price for a specific
good or service.
SUPPLY
 Fundamental economic concept that
describes the total amount of a
specific good or service that is
available to consumers.
TYPES OF
DEMAND
 1. Price demand:
Price demand refers to the different quantities of the
commodity or service which consumers will purchase at
a given time and at given prices, assuming other things
remaining the same.

 2. Income demand:
refers to the different quantities of a commodity or service
which consumers will buy at different levels of income,
assuming other things remaining constant.
 3. Cross demand:
When the demand for a commodity depends not on its price
but on the price of other related commodities, it is called
cross demand.

 4. Direct demand:
Commodities or services which satisfy our wants directly are
said to have direct demand.
 5. Derived demand or Indirect demand:
 5. Derived demand or Indirect demand:

Commodities or services demanded for producing

goods which satisfy our wants directly are said to have
derived demand.

 6. Joint demand:
In finished products as in case of bread, there is need
for so many things—the services of the flour mill, oven,
fuel, etc. The demand for them is called joint demand.
 7. Composite demand:
A commodity is said to have a composite demand
when its use is made in more than one purpose.
TYPES OF SUPPLY
1. Market Supply:
Market supply is also called very short period supply.
Another name of market supply is ‘day-to-day supply or
‘daily supply’.

2. Short-term Supply:
In short period supply, the demand cannot be met as per
requirements of the purchaser. The demand is met as
according to the goods available.
3. Long-term Supply:
In this, if demand has been changed the supply can also
be changed because there is sufficient time to meet the
demand by making manufacturing goods and supplying
them in the market.

4. Joint Supply:
Joint supply refers to the goods produced or supplied
jointly. In joint supplied products one is the main product
and the other is the by-product of its subsidiary.
5. Composite Supply:
In this, the supply of a commodity is made from various
sources and is called the composite supply. When there
are different sources of supply of a commodity or
services, we say that its supply is composed of all these
resources. We normally get light from electricity, gas,
kerosene and candles. All these resources go to make the
supply of light. Thus, the way of supplying the light is
called composite supply.
 Differences Between Demand and
Supply
 The equilibrium between the quantity demanded and the price of a
commodity at a given time is known as demand. On the other hand,
the equilibrium between the quantity supplied and the price of a
commodity at a given time is known as supply.
 while demand curve slopes downward, supply curve is upward
sloping.
 Demand is the willingness and paying capacity of a buyer at a
specific price while Supply is the quantity offered by the producers to
its customers at a specific price.
 Demand has an inverse relationship with supply, if demand increases
supply decreases and vice versa.
 Demand has an indirect relationship with the price if price
increases the demand decreases and if the price decreases the
demand increases, however, the price has a direct relationship
with supply, if price increases the supply will also increase and if
the price decreases supply also decreases.
 Demand represents the customer’s taste and preferences for a
particular commodity demanded by him, whereas Supply
represents the firms, how much of a commodity is offered by the
producers in the market.
Law of Supply
and Demand
The law of demand says that at higher prices, buyers will
demand less of an economic good.

The law of supply says that at higher prices, sellers will

supply more of an economic good.

These two laws interact to determine the actual market

prices and volume of goods that are traded on a market.

Several independent factors can affect the shape of

market supply and demand, influencing both the prices
and quantities that we observe in markets.
Equilibrium :
it occurs when the quantity
demanded is equal to the quantity
supplied.
THANK YOU!
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