A

STUDY MATERIAL
(FOR ONLINE LECTURE)
ON
EEM (SEMESTER - 5)
PREPARED & PRESENTED BY
PROF. YASHVANTSINH YADAV
ASSISTANT PROFESSOR
CIVIL ENGINEERING DEPARTMENT
HCET, SIDHPUR
 Subject – EEM (Sem – 5)
Lecture – 3
Date – 28/07/2020
Topics
- Exceptions to the Law of Demand
- Expansions and Contraction of Demand
- Individual Demand & Market Demand
- Introduction to Supply
- Difference between Stock & Supply
 Exceptions to the Law of Demand
According to Law of Demand, A price change creates demand to change
in opposite direction than that indicated in the law of Demand.
Some exceptions to the Law of Demand are explained below:

Prestigious Goods Extremely Low priced Goods Giffen Goods

Certain goods which are
priced very high and are
generally consumed by
very rich people are
exceptions to the law of
demand.
Such goods are used by the rich
as status symbols and hence,
even when there is a rise in their
price, their demand expands
instead of contracting.
Certain goods are When price of certain goods
extremely low priced called inferior goods fall and the
real income of a consumer rises,
Goods and hence the she or he may reduce the
entire consumption consumption of such goods and
expenditure on such substitute these by good of a
goods forms a very superior quality. These goods
small proportion of the were named after Robert Gifen
who made such observations
consumer's income. and explained this idea.
Identify Prestigious/Extremely Low priced/Giffen Goods:
 Expansions and Contraction of Demand

 When other determinants are assumed to remain Constant and price is varied,
there is an expansion and contraction of demand.

When prices falls keeping other determinants constant, there is an expansion in

demand, accordingly when price rises and other determinants do not change
then there is contraction of demand.
 Individual Demand & Market Demand
Demand in economics is also classified as Individual Demand and Market demand.

Individual Demand Market demand

Individual demand of a good The sum total of such individual
by individual consumer at a demands of all existing
given price at a given consumers in the market is called
particular point of time. market demand at a given price
at a given point of time.
 Introduction to Supply

 Demand and Supply both are equally important determinants of price. In order to
fully understand the concept of demand, It is necessary to understand the concept of
Supply.

 Considering the demand for various goods

in the market, it becomes the market to
ensure the supply of these goods. Supply
must be altered in accordance to changes
in demand. Just as there is a different
demand at every price, there also is a
corresponding Supply to every price.
 Meaning of Stock and Supply
 In everyday language, a distinction between Supply and stock is not drawn. However
in economics there is clear distinction between stock and Supply.

Stock:
It is the total Available amount of
goods with a producer which can be
offered for sale in the market as per
the ability and willingness of the seller.
Supply:
It is that amount of production which a
producer is able and willing to sell in the
market at a given price and at a
particular point of time.

If a tenderer of oil desires to sell 1000 packets of oil while he/she has an available
stock of only 500 packets then ability to sell is only 500 packets.

If a tenderer of oil has 1000 packets of oil in his/her warehouse but still he/she
wants to sell only 300 packets at given price at particular point of time then
willingness to sell is only 300 packets.
In Next Lecture …on 04/08/2020 (Tuesday)
Topics
- Factors Affecting Supply
- Supply Function
- Law of Supply
- Exceptions to the law of supply
- Expansions/Contraction of Supply
- Individual Supply and Market Supply
- Equilibrium B/w Demand & Supply
(If Possible)