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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
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