Demand Analysis

Meaning of Demand
• Desire is a wish. For e.g a beggar desires a big house.
• Want is an effective desire which is backed by the ability and
willingness to buy the product. E.g. a doctor wants a car.
• Demand refers to the amount of the goods which the consumer
will purchase at a given price and at a give time. For. eg. A
milkman buys 2000 litres of milk on every Sunday at Rs. 50 Per
litre.

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 Types of Demand

-Direct and derived demands

-Individual and market demand
-Complementary and competing

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 DETERMINANTS OF DEMAND
• Price of Product
• Income of Consumer
• Price of Related Good
• Tastes and Preferences
• Advertising
• Consumer’s expectation of future Income and Price
• Growth of Economy
• Seasonal conditions
• Population
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 Demand Schedule
• It shows the price and output relationship.
• Tabular representation of price and demand.

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 DEMAND CURVE
• The geometrical representation of demand schedule is called
the demand curve.

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Market Demand Schedule

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Derivation of Market Demand Curve

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 LAW OF DEMAND
• As the price of a good rises, quantity demanded of that good
falls.
• As the price of a good falls, quantity demanded of that good
rises.
• Ceteris paribus.
• ..\Downloads\Law of Demand.mp4

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UPES – The Nation Builders University

Demand Function

When we express the relationship between demand and its

determinant
mathematically, the relationship is known as demand function.

The demand for product X can be written in functional form as-

Dx= f (Px, Y, Po, T, A, Ef, N )

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 Why does the demand curve slope downwards?

• Law of Diminishing Marginal Utility

• Income Effect
• Substitution Effect
• Several Uses of a commodity
• No. of consumers

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 Exceptions to the law of demand
• Inferior Goods
• Snob Appeal
• Demonstration Effect
• Future Expectation of Prices
• Insignificant proportion of income spent
• Goods with no Substitutes

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 Change in quantity demanded or Movement along the
demand curve
Movement along the demand curve is due to the change in price of the commodity. When the price rises,
Quantity demanded falls and it is known as Contraction of Demand. When the price falls, quantity
demanded
Rises and it is known as Extension of Demand.

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 Change In Demand
• A shift of the entire demand curve to a new position is called
change in demand.
• Changes in non-price determinants of demand. There is
increase or decrease in Demand i.e rightward or leftward shift.

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