Changes in demand

Welcome

1 Introduction

2. Meaning of Demand

3. Demand function

4. Types of Changes in Demand

5. Due to changes in Price

a) Extension of demand

b) Contraction of the demand

6.Due to changes in other factor

a) Increase in demand

b) Decrease in demand

7. Conclusions

Changes in DEMAND

Changes in DEMAND

1. Introduction to demand

1. Introduction to demand

2. Meaning and definition of Demand

The amount of a particular economic good or service that a

consumer or group of consumers will want to purchase at a

given price within a period of time.

In economics, demand is the desire to own , the ability to pay

for it, and the willingness to pay to buy a particular

commodity at Price within a given point of time.

2. Meaning and definition of Demand

3. Demand function

The demand function is the mathematical expression of the functional

relationship between the quantity of a good and those factors that affect

the willingness and ability of a consumer to buy the good.

Demand function > Qd = f(Px, Y , Pr, t, p, w, g, Ad, wealth, etc)

3. Demand function

When these factor change the demand is also change.

4. Types of Changes in Demand

1. Due to changes in Price of the commodity ( Other factors remaining the same)

a) Extension of demand

b) Contraction of demand

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

a) Increasing demand – Upward shift in demand

b) Decreasing in demand – Downward shift in demand

4. Types of Changes in Demand

a) Extension of demand

1. Due to changes in Price of the commodity -

( Other factors remaining the same)

a) Extension of demand

An extension of demand is an rise in the quantity

demanded because the price has changed , other

factor reaming the same.

Price Quantity

12,000 15 unit

8,000 20 unit

5. Due to changes in Price

Price Quantity

12,000 15 unit

8,000 20 unit

Quantity demanded

Price of good

P-12,000

P-8,000

Q -15 Q -20

E1

E2

An extension of demand denote E1 to E2is an rise in the quantity demanded because the price has changed , other factor reaming the same.

5. Due to changes in Price a) Extension of demand

E1 to E2

a) Contraction of demand

1. Due to changes in Price of the commodity ( Other factors remaining the same)

a) Extension of demand and

b) Contraction of demand

An CONTRACTION of demand is an fall in the quantity demanded because the

price has changed , other factor reaming the same.

Price Quantity

12,000 15 unit

15,000 10 unit

5. Due to changes in Price b) Contraction of demand

Price Quantity

12,000 15 unit

15,000 10 unit

An CONTRACTION of demand is an fall in the quantity demanded

because the price has changed , other factor reaming the same.

Quantity demanded

Price of good

P-12,000

P-15,000

Q -15Q -10

E1

E2

Contraction of demand

Extension of demand Contraction of demand

1. Are due to changes in Price of the commodity

2. The change taken place on the same demand curve – Movement along the

demand curve.

3. Leads to changes on quantity demanded

6.Due to changes in factors other than price

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

a) Increasing demand – Upward shift in demand

b) Decreasing in demand – Downward shift in demand

6.Due to changes in factors other than price

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

A shift in demand curve refers to the effect of in demand due to changes in a factor other than price.

Shift in demand taken place due to the changes in 1. Income of the consumer2. Price of related goods3. Advertisement4. Government policy5. Taste and preference6. etc

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

a) Increasing demand – Upward shift in demand

b) Decreasing in demand – Downward shift in demand

a) Increase in demand

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

a) Increasing demand – Upward shift in demand

a) Increase in demand

• An increase in income of

the consumer

• High level of

advertisement

Quantity demanded

Price of good

P-12,000

Q -15

E1

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

a) Increasing demand – Upward shift in demand

a) Increase in demand

Quantity demanded

Price of good

P-12,000

Q -15 Q -20

E1E2

b) Decrease in demand

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

a) Increasing demand – Upward shift in demand

b) Decreasing in demand – Downward shift in demand

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

b) Decreasing demand – downward shift in demand

a) Increase in demand

• A fall in in income of the

consumer

• Low level of

advertisement

Quantity demanded

Price of good

P-12,000

Q -15

E1

2. Due to changes in other than Price – Shift in demand ( Price of the commodity remaining the same )

b) decreasing demand – downward shift in demand

a) Increase in demand

Quantity demanded

Price of good

P-12,000

Q -15Q -10

E1E2

7. Conclusions

???