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S A M P L E F O O T E R T E X T 0 3 / 0 7 / 2 0 2 4
TH EO RY O F D EM A ND
IMPORTAN • Theory of Demand, tells the
relationship between the price
CE of goods and its quantity
demanded. If the price of any
OF STUDYI good or service increases then
its demand decreases and vice
NG THEOR versa.
• Theory of demand is related to
Y OF economic activity of the
consumer who want to seek
DEMAND maximum utility within his/her
limited income.
 • Demand may be defined as the desire a
commodity that a consumer is able and
W H AT
willing to buy, at each possible price, over a
IS
given period of time.
DEMAN
• Demand is of two types-
D AND
1.Individual demand
IT'S
TYPES 2.Market demand
 • 1.PRICE OF A GIVEN
FA C T O R S A F F E C T I N G
INDIVIDUAL DEMAND
COMMODITY- It is the
most important factor affecting
demand for the given commodity.
Generally, there exists an inverse
relationship between price and
quantity demanded. It means, as
price increases, quantity demanded
falls due to decrease in
the satisfaction level of consumers
 PRICE OF RELATED GOODS
• 1.SUBSTITUTE GOODS - Goods which can be used in place of one
another for the satisfaction of a particular want are called substitute
goods. A decrease in the price of substitute goods leads to an increase in
the demand for given commodity and vice versa.

• So the demand for a commodity is directly affected by change in price of

Substitute goods.
 • 2.COMPLEMENTRY GOODS-
Complementary goods are those goods
which are used together to satisfy a
given want. They are demanded
PRICE OF jointly. An increase in the price
COMPLEMN of one good causes a decrease in the
T RY G O O DS demand of the other good.
• So the demand for a given commodity
is inversly affected by change in
price of complementry goods.
 • Change in income of the consumer
also influences is demand for
different goods
• There are two types of goods

1.NORMAL GOODS - If the given

INCOME commodity is a normal good then

OF A increase in income leads to rise in

demand when decrease in income leads
BUYER to decrease in demand.
2.INFERIOR GOODS - If the given
commodities is an inferior good than
an increase in income leads to
decrease in demand while decrease in
• 1.POPULATION SIZE - Demand increase with increase in
population and decreases with decrease in population.

• 2.DISTRIBUTION OF INCOME – if the income is equally

ditsributed there will be more demand , And if not then there will
be less demand

DETERMINANTS OF MARKET
DEMAND
DEMAND SCHEDULE- IT IS REFERRED
TO AS A TABULAR REPRESENTATION
OR A TABULAR STATEMENT THAT
SHOWS VARIOUS QUANTITIES OF
COMMODITIES THAT ARE DEMANDED
AT DIFFERENT PRICE LEVELS AT A
SPECIFIC TIME PERIOD.

INDIVIDUAL DEMAND SCHEDULE IS A

TABULAR REPRESENTATION OF THE
QUANTITIES OF GOODS THAT AN
INDIVIDUAL DEMANDS AT DIFFERENT
PRICES AND TIME, KEEPING ALL THE
OTHER FACTORS CONSTANT.
MARKET DEMAND SCHEDULE
SHPWS THAT ALL THE CONSUMERS
ARE WILLING AND CAPABLE TO
PURCHASE AT DIFFERENT LEVELS OF
PRICES DURING A GIVEN TIME
PERIOD
DEMAND CURVE- DEMAND CURVE IS
A GRAPHIC PRESENTATION OF
DEMAND SCHEDULE EXPRESSING
THE RELATIONSHIP BETWEEN
DIFFERENT QUANTITIES OF A
COMMODITY AT DIFFERENT
POSSIBLE PRICES.

WHY IS THE MARKET DEMAND

CURVE FLATTER?

IT HAPPENS BECAUSE WITH

CHANGE IN PRICE, PROPORTIONATE
CHANGE IN MARKET DEMAND IS
MORE AS COMPARED TO
PROPORTIONATE CHANGE IN
INDIVIDUAL DEMANDS .
L A W O F • Law of demand states the inverse
D E M A N D relationship between price and quantity
demanded , keeping other factors constant .
• Why other factors are to be kept constant?

Because the quantity demanded of a

commodity depends on many factors besides
price.so If we want to understand separate
influence of one factor, it is necessary that all
other factors should be constant
 • EXPANSION- Other things being equal
MOVEMENT
when quantity demanded increases due to
ALONG THE
fall in own price of commodity it is called
DEMAND CURVE
expansion of demand. Expansion of
demand is indicated by a downward
movement along the demand curve.
• CONTRACTION-Other things being
equal when quantity demanded decreases
due to rise and on price of commodity it is
called contraction of demand. Similar to
expansion of demand, contraction of
demand is indicated by upward movement,
along the demand curve
 • INCREASE IN DEMAND-Increase in

SHIFTS IN demand refers to increase in quantity

demanded of a commodity at its
DEMAND existing price, due to change in other
CURVE factors. It is a situation of forward
shift in the demand curve.
• DECREASE IN DEMAND-decrease in
demand refer to a fall in demand of a
commodity due to any factor other
than own price of a commodity .In
this case demand falls at the same
or even at lower price. It leads
to leftward shift in demand curve.
CONCLUSION-THE BETTER
Y O U U N D E R S TA N D T H E L AW O F
DEMAND, THE BETTER YOU
WILL UNDERSTAND WHY YOU
PAY D I F F E R E N T P R I C E S F O R
DIFFERENT GOODS.
 THANK YOU

A PRESENTATION BY DESHNA
SONI