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Managerial Economics: FACULTY: Prof. Venugopal Naidu
Managerial Economics: FACULTY: Prof. Venugopal Naidu
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MODULE:1
DEMAND ANALYSIS
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Meaning of Demand
Demand implies 3 conditions :
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Types of Demand
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Law of Demand
The law of demand expresses the
relationship between the price & quantity
demanded .It says that demand varies inversely
with price.
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Assumptions- Law Of Demand
Consumers Income remains Constant
The Tastes & Preferences Of the
Consumers remain the same
Prices of other related Commodities remain
Constant
No new Substitutes are available for the
Commodity.
Consumers do not expect further change in
the price of the commodity.
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Continued…
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DEMAND SCHEDULE
Individual Demand Schedule
Market Demand schedule
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Individual demand schedule
(Hypothetical)
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Hypothetical market demand
schedule
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Exceptions to the law of demand
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Continued…
Giffen’s Paradox (Robert Giffen-Irish
Economist)
Veblen’s Effect (Thorstein Veblen – USA )
Price Illusion
Emergency
Necessaries
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Continued…
Conspicious Necessaries (More Noticeable)
Eg:- TV, Watch, Scooters, Car etc
Fear of Shortage
Ignorance
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Why does the demand curve slope
downwards to right
OR
Why does demand curve has a negative
slope?
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CHANGES IN DEMAND
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2. Increase and decrease in demand:
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Increase and Decrease in Demand
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DEMAND DISTINCTIONS
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Continued…
Derived Demand and Autonomous
Demand.
Industry Demand and Company Demand
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DETERMINANTS OF DEMAND (OR) FACTORS
AFFECTING DEMAND
(Refer: Lekhi & Agarwal- Business Economics)
Price of Commodity
Price of Related Goods
Income of the Consumer
Distribution of Wealth
Tastes & Habits
Population growth
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Continued…
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