Meaning And Definition Of Demand .

DEMAND ANALYSIS AND LAW OF DEMAND Nikhil 97Jun-98Vaidehi-99Nikita- 100Vishakha-101Pooja-102Meaning And Definition Of Demand .In common usage, demand means a desire or a want, but, in economics desire, want and demand are three different concepts. In economics, every desire is not a want and every want is not a demand.

In economics the term desire has been has been use as three forms : Prof. Pension : Demand is an effective desire. a)Desire for a commodity and availability of the desired commodity, b)Ability to pay for the desired commodity c)Willingness to spend for it. 2) Prof. Mill : Demand is the quantity demanded at a particular price.3) Prof. Bentham : Demand is the quantity demanded at a particular time. Types Of Demand .Price DemandIncome DemandCross Demand : i) Complementary Goods. ii) Substitute Goods.Joint DemandDerived Demand Collective Demand

Essential elements of demandThere must be a desire for a particular commodity.Desired commodity must be available in the market.Consumer must have sufficient amount of money and he is ready to spend to purchase the commodity.The demand must be expressed at a particular price.The demand must be expressed at a particular time.Explanation of law of demand EXPLAINS RELATIONSHIP BETWEEN PRICE AND DEMAND OF A COMMODITY. DEMAND DECREASES PRICE INCREASES AND DEMAND INCREASES PRICE INCREASES.INVERSE RELATION BETWEEN PRICE AND QUANTITY DEMANDED.

Individual Demand Schedule :Price of commodityQuantity Demanded1049688710612Market Demand Schedule :Price of CommodityMr. X Mr. Y Mr. ZTotal Market Demand10464020968122688101432710121638612141844Individual & Market Demand Curve

Assumptions of law of demandIncome of the consumer remains constant

There should be no change in tastes and preferences

Population should remain constant

There should be no hope of change in prices

Government policy should remain constant

Weather conditions should be same

No new advertisements should be introduced

Reasons of law of demand sloping downwards

Law of diminishing marginal utility.Substitution effectIncome effectNumber of consumersShift in DemandChanges in quantity demanded.Expansion of demand Increase in demand (due to fall in prices).Contraction in demand Decrease in demand (due to rise in prices).

Changes in demand

Increase in demand Shift in demand curve towards right.

Decrease in demand- Shift in demand curve towards left.

Exceptions to law of DemandGiffins ParadoxConspicuous necessitiesCommodities of prestigeExpectations of future changes in priceEmergencies

Determinants of DemandPrices of commodityIncome of consumersPrice of related goodsHabits and tastesSize of populationAdvertisement THANK YOU!