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Economics Project: Elementary Theory of Demand
Economics Project: Elementary Theory of Demand
Samarth Kulkarni, X C
Elementary Theory Of Demand
Index :
1. Introduction to Elementary Theory
Of Demand
2. Meaning of demand- individual and
market demand
3. Factors affecting demand
4. Statement of law of demand
5. Bibliography and Acknowledgement
Introduction to Elementary Theory Of Demand
Demand means the specific quantity of a commodity or
service that a consumer is willing to buy at a given price and a
given time.
Individual Demand
An individual household is the basic decision maker regarding consumption of a
commodity or service. It takes decisions regarding what to buy and how much much to
buy. It shows the desired demand for a commodity at different possible prices.
Individual demand is determined by commodity’s own price, price of related goods,
income of the consumers.
Market Demand
Market demand refers to the total quantity of a commodity that all the consumers or
households are willing to buy in the market at a particular price during a specific
period. In addition to all factors that determine individual demand, market demand
also depends upon number of consumers, distribution of income, season and weather,
government policy,etc.
Factors Affecting Demand
1.Price of the Commodity
Other things being equal, demand for a
(b)Complementary goods:
Complementary goods are those goods which are used
(a) Normal Goods: “Normal goods are those the demand for which increase in
income of the consumers”. For instance, a consumer increases his demand
for milk, clothes, furniture, refrigerator, and TV sets as his income increases.
(b) Inferior Goods: “The demand for which falls, as income of the consumer
increases.” There is an inverse relationship between income of the consumer
and the amount demanded of inferior goods. E.g. A consumer may buy
toned milk when his income is less because he cannot afford to buy pure
milk.
4. Tastes and Preferences:
The amount demanded of a commodity also depends on the