An Economic Concept presented by

Jaydon Agbeko Y.
A MicroEconomic Concept Presented by
Jaydon Y. Agbeko
ASSESMENT OBJECTIVES

A01
Knowledge and
understanding (of
relevant economics
theories and
concepts).
ASSESMENT OBJECTIVES

A01 A02
Knowledge and Application and
understanding (of analysis (of theories
relevant economics and concepts relevant
theories and to the question).
concepts).
ASSESMENT OBJECTIVES

A01 A02 A03

Synthesis and
Knowledge and Application and
evaluation (of the
understanding (of analysis (of theories
theories, concepts and
relevant economics and concepts relevant
arguments put
theories and to the question).
forward when
concepts).
answering the
question).
DEMAND
01
What is Demand?
Demand is an economic
concept that relates to a
consumer's desire to
purchase goods and
services and willingness
to pay a specific price for
them, over or at a given
period. This is also
known as ‘Effective
Demand’.
02
The Law of Demand
This Law states that all other
factors being constant
(Ceteris Peribus) as the
price of a good rises the
quantity demanded for that
good falls equivalent to that
rise, and as the price of a
good falls, the quantity
demanded for that food rises
equivalent to that fall. A
negative relationship.
03
The Demand Curve
The demand curve is a
graphical representation of the
relationship between the price
of a good or service and the
quantity demanded for a given
period. In a typical
representation, the price
appears on the left vertical axis
while the quantity demanded is
on the horizontal axis.
04
What is Demand?
Demand is an economic
concept that relates to a
consumer's desire to purchase
goods and services and
willingness to pay a specific
price for them. An increase in
the price of a good or service
tends to
decrease the quantity demanded
.
DEMAND
01
What is Demand?
Demand is an economic
concept that relates to a
consumer's desire to
purchase goods and
services and willingness
to pay a specific price for
them, over or at a given
period. This is also
known as ‘Effective
Demand’.
02
The Law of
Demand
This Law states that all
other factors being constant
(Ceteris Peribus) as the price
of a good rises the quantity
demanded for that good falls
equivalent to that rise, and
as the price of a good falls,
the quantity demanded for
that good rises equivalent to
that fall. A negative
relationship.
03
The Demand Curve
The demand curve is a
graphical representation of
the relationship between
the price of a good or
service and the quantity
demanded for a given
period. In a typical
representation, the price
appears on the left vertical
axis while the quantity
demanded is on the
horizontal axis.
04
What is Demand?
Demand is an economic
concept that relates to a
consumer's desire to
purchase goods and
services and willingness
to pay a specific price for
them. An increase in the
price of a good or service
tends to
decrease the quantity de
manded
.
DEMAND
01
What is Demand?
Demand is an economic
concept that relates to a
consumer's desire to
purchase goods and
services and willingness
to pay a specific price for
them, over or at a given
period.
This is also known as
‘Effective Demand’.
02
The Law of
Demand
This Law states that all
other factors being constant
(Ceteris Peribus) as the
price of a good rises the
quantity demanded for that
good falls equivalent to that
rise, and as the price of a
good falls, the quantity
demanded for that food rises
equivalent to that fall. A
negative relationship.
03
The Demand Curve
The demand curve is a
graphical representation of
the relationship between
the price of a good or
service and the quantity
demanded for a given
period. In a typical
representation, the price
appears on the left vertical
axis while the quantity
demanded is on the
horizontal axis.
04
What is Demand?
Demand is an economic
concept that relates to a
consumer's desire to purchase
goods and services and
willingness to pay a specific
price for them. An increase in
the price of a good or service
tends to
decrease the quantity demanded
.
DEMAND
01
What is Demand?
Demand is an economic
concept that relates to a
consumer's desire to
purchase goods and services
and willingness to pay a
specific price for them, over
or at a given period.
This is also known as
‘Effective Demand’.
02 03 04
The Law of Demand The Demand Curve Types of Demand
This Law states that all other The demand curve is a
factors being constant (Ceteris Curves
graphical representation of -Individual
Peribus) as the price of a good
rises the quantity demanded for the relationship between -Market
that good falls equivalent to the price of a good or
-Elastic :-
that rise, and as the price of a service and the quantity
Unitary
good falls, the quantity demanded for a given
demanded for that food rises Fairly
period. In a typical
equivalent to that fall. A
representation, the price Perfectly
negative relationship.
appears on the left vertical -Inelastic :-
axis while the quantity Unitary
demanded is on the Fairly
horizontal axis. Perfectly
DEMAND

05 04
Function(s) of the Types of Demand
Demand Curve(s) Curves
A demand curve is a -Individual
graph that shows the -Market
relationship between the -Elastic :-
price of a good or service Unitary
and the quantity Fairly
demanded within a Perfectly
specified time frame. -Inelastic :-
Unitary
Fairly
Perfectly
DEMAND

07 06 05 04
Substitutes Assumptions Function(s) of the Types of Demand
Key Takeaways. A substitute Curves
is a product or service that can underlining the Demand Curve(s)
be easily replaced with another demand Curve A demand curve is a -Individual
by consumers. -1. No change in habits, graph that shows the -Market
Determinants of customs and income of relationship between the -Elastic :-
Demand consumers price of a good or service Unitary
-Price of product 2. This law does not and the quantity Fairly
-Consumer's Income
apply on necessaries of demanded within a Perfectly
-Price of Related Goods
-Tastes and Preferences of life specified time frame. -Inelastic :-
Consumers 3. Joint demand
4. Articles of distinction
Unitary
-Consumer's Expectations
-Number of Consumers in the 5. Fear of shortage in Fairly
Market future Perfectly
DEMAND

07 06 05 04
Substitutes Assumptions Function(s) of the Types of Demand
Key Takeaways. A underlying the Demand Curve(s) Curves
substitute is a product or A demand curve is a -Individual
service that can be easily
demand Curve
graph that shows the -Market
replaced with another by -1. No change in habits,
customs and income of relationship between the -Elastic :-
consumers. price of a good or service
consumers Unitary
Determinants of 2. This law does not and the quantity Fairly
Demand apply on necessaries of demanded within a Perfectly
-Price of product life specified time frame.
-Consumer's Income
-Inelastic :-
3. Joint demand
-Price of Related Goods 4. Articles of distinction
Unitary
-Tastes and Preferences of 5. Fear of shortage in Fairly
Consumers Perfectly
future
-Consumer's Expectations
-Number of Consumers in
the Market
DEMAND 08
Movements and
Shifts along and on
the Demand Curve
-Keeping all other
factors the same,
when there is a
change in demand of
a commodity due to
change in price, it is
referred to as the
change in quantity
demanded. It is shown
as a movement along
the demand curve
when expressed
graphically
DEMAND
The concept of Demand
strikes the need to define what
“Wants and Needs” are

The textbook While that is factual and We, as

definition of generally acceptable, Demand Economics
Demand is that cannot have a single definition
Demand is an students must
justifying what it means. ask ourselves
economic concept
Therefore, that brings up the
that relates to a such questions
consumer's desire to question:
when faced with
purchase goods and -What do you think Demand is?
-As well as the question, what do the demands of
services
and willingness to you demand for? Individuals such
pay a specific price And as consumers.
for them. -What factor(s) influence(s)
those/that Demand(s)?

In economics, needs are essential for human survival, while wants are things we may desire.
DEMAND
Market Demand Individual Cross Demand Price Demand
Demand
This describes the This refers to the Assuming other things Assuming other factors as
demand for a good or remaining as constant, a constant, a relationship
demand for a given
a service by an relationship between the between the consumer’s
product and who demand of a given income and the quantity
wants to purchase it. individual (or a demanded for a
commodity and the price
household). of related commodities. commodity is known as
Income Demand.

Assuming other factors as When demand for two or When a commodity directly
constant, a relationship When a commodity can more goods arises satisfies the demand of
between the consumer’s be used for more than simultaneously for consumers For
one purpose, then such example, demand for books,
income and the quantity satisfying a particular want
stationery, clothes, food, etc.,
demanded for a type of demand is known of the consumer, then such is a direct demand as these
commodity is known as as Composite Demand. . type of demand is known as goods directly satisfy the
Income Demand. Joint Demand. wants.
Composite Direct & Derived
Income Demand Joint Demand
Demand Demand
DEMAND: Curves This is a simple demand curve
showing the relationship
between the price of a ‘bottle
of water’ and the quantity
Price D demanded for that bottle of
We’ve learnt that the Demand Curve is a graphical water relative to the price of
representation of the relationship between Price and Water
the water

Quantity Demanded, we were also informed and thought

on how to effectively display how the Price of certain
Goods and Services affect the Quantity Demanded for
those Goods and Services.
Some of the most demanded goods and services after the necessities
( Clothes, Shelters, Food and Water) consist of ;
•Beauty products and cosmetics. D
•Jewelry.
0
•TV and smartphone accessories. Quantity
•Designer sunglasses.
•Children's toys and games.
•Video games.
•Pet supplies
DEMAND: Types of Curves
Elastic Demand Price D Price
D
In the case of Elastic Demand, the responses of
120
consumers will be measurably high.
There are Two types of said Demand 50
-Unitary
-Perfectly D
Quantity 0 70 75 Quantity
-Fairly

Price Price
In the case of Inelastic Demand, the responses of
D consumers will be measurably low, inverse to Elastic
120 Demand
110
D D There are Two types of said Demand
-Perfectly
-Fairly
Quantity 0 50 130 Quantity
Inelastic Demand
DEMAND: Types of Curves
Individual Demand
Price D
Individual Demand, as the name states, is simply just
the demand or service of a single Individual or Entity
such as a Household

Price D

D
0
Quantity
Market Demand is basically the sum of the Individual
demand in a Market. Factoring the demand for a given
D product and who wants to purchase it.
0
Quantity Market Demand
DEMAND: Assumptions
Diminishing marginal utility
For example, we are hungry. The
first plate will give the highest
satisfaction and taste delicious.
We then add a second plate; it also
gives additional satisfaction, but
not as delicious as the first plate
because we are already quite full.
The third plate will also give
lower satisfaction than the second
plate and so on. So, every time we
add to the plate for the next meal,
we get decreased satisfaction
because we are getting fuller.
Information from; https://penpoin.com/assumptions-underlying-the-law-of-demand/
The Income Effect
Say we have an income of GHS
1,000. We can use it to buy 100
units of a product at GHS 10 per
unit. In this case, the income of
100 units represents our real
income.
Now assume our nominal income
is fixed. When the price of the
product falls, our real income
rises. Say the price drops to GHS
5 per unit. Now we can buy 200
units. On the other hand, if it rises
to GHS 20, we can only get 50
units using our income.
The Substitution Effect
Take Pepsi and Coca-Cola, for
example. They cater to our need
for soft drinks. And, given the
budget, we can’t buy both at once.
So, when we have chosen Pepsi,
we have given up Coca-Cola. And
conversely, choosing Coca-Cola
means giving up Pepsi. So, for
example, when the price of Pepsi
goes up, we switch to Coca-Cola
and vice versa; when the price of
Coca-Cola goes up, we switch to
Pepsi.
Links/ References
Resources From:
• https://www.google.com/url?s
a=i&url=https%3A%2F%2Fww
w.eiu.com%2Fn%2Fconsumer-
goods-in-2022-knots-in-the-su
pply-chain%2F&psig=AOvVaw1
jvZBoXfaDrJXxpQ8t4hG8&ust=
1692218047475000&source=i
mages&cd=vfe&opi=89978449
&ved=0CBIQjhxqFwoTCPiR8ND
B34ADFQAAAAAdAAAAABAE
• https://www.investopedia.com
/terms/d/demand.asp#:~:text=
Demand%20is%20an%20econ
omic%20concept,to%20decrea
se%20the%20quantity%20dem
• https://www.google.com/url?s
a=i&url=https%3A%2F%2Fww
w.eiu.com%2Fn%2Fconsumer-
goods-in-2022-knots-in-the-su
pply-chain%2F&psig=AOvVaw1
jvZBoXfaDrJXxpQ8t4hG8&ust=
1692218047475000&source=i
mages&cd=vfe&opi=89978449
&ved=0CBIQjhxqFwoTCPiR8ND
B34ADFQAAAAAdAAAAABAE
• https://www.investopedia.com
/terms/d/demand.asp#:~:text=
Demand%20is%20an%20econ
omic%20concept,to%20decrea
se%20the%20quantity%20dem
Links/ References
Resources From:
• https://www.google.com/url?s • https://penpoin.com/assumptio
a=t&rct=j&q=&esrc=s&source= ns-underlying-the-law-of-deman
web&cd=&cad=rja&uact=8&ve d/
d=2ahUKEwiI2M6igeyAAxVKUk
EAHZ-2AuEQFnoECCMQAw&url
=https%3A%2F%2Fwww.netsui
te.com%2Fportal%2Fresource%
2Farticles%2Fbusiness-strategy
%2Felasticity-of-demand.shtml
%23%3A~%3Atext%3DElasticity
%2520of%2520demand%2520r
efers%2520to%2Cadvertising%
2520pressure%2520and%2520c
ustomer%2520income.&usg=A
OvVaw3OL1dboTGf0PVoexId5C
RZ&opi=89978449
 • The Substitution Effect
• This effect explains our choices when the price of a product changes. If two products substitute for each
other, they satisfy our same need. If the price of one changes, it will affect our choice.
• Economists assume we are rational consumers. So, we tend to replace products with higher prices with
cheaper ones. So, when the product’s price rises, we will choose its substitute.
• Why did such a choice appear? The product and its substitutes satisfy the same need. So, choosing one
means giving up the other. It doesn’t make sense to buy both at the same time.
• Take Pepsi and Coca-Cola, for example. They cater to our need for soft drinks. And, given the budget, we
can’t buy both at once. So, when we have chosen Pepsi, we have given up Coca-Cola. And conversely,
choosing Coca-Cola means giving up Pepsi. So, for example, when the price of Pepsi goes up, we switch
to Coca-Cola and vice versa; when the price of Coca-Cola goes up, we switch to Pepsi.
• From the illustration, we know, when the price of a product rises, ceteris paribus, it reduces its quantity
demanded because some consumers will switch to its substitutes. But, conversely, if the price falls, ceteris
paribus, some consumers switch from substitutes to the product, increasing the quantity demanded.