DEMAND AND TYPES OF DEMAND

 DEMAND

Objectives of demand

1. To understand different types of demand in economics.

2. To identify consumer demand for goods and services.

3. To explain complementary demand (goods used together).

4. To understand substitute demand (goods used instead of another).

5. To know joint demand (two or more goods demanded together).

Short Abstract on Demand

Demand is an important concept in economics. It refers to the quantity of a good or service that consumers are willing and able to buy at different prices during a given period of time. The law of demand states that when the price of a product increases, the demand decreases, and when the price decreases, the demand increases, assuming other factors remain constant. Demand is influenced by factors such as income, taste, price of related goods, and population. Understanding demand helps producers and businesses decide the level of production and pricing in the market.

Reading Material

Meaning of Demand

 

Demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time.

Types of Demand

1. Price demand: It refers to various types of quantities of goods or services that a customer will buy at a quoted price and given time, considering the other things remain constant.

2. Income demand: It refers to various types of quantities of goods or services that a customer will buy at different stages of income, considering the other things remain constant.

3. Cross demand: This means that the product’s demand does not depend on its own cost but depends on the cost of the other related commodities.

4. Direct demand: When goods or services satisfy an individual’s wants directly, it is known as direct demand.

5. Derived demand or Indirect demand: The goods or services demanded or needed for manufacturing the goods and satisfying the consumer indirectly is known as derived demand.

6. Joint demand: To produce a product there are many things that are related to each other, for example, to produce bread, we need services like an oven, fuel, flour mill, and more. So, the demand for other additional things to produce a product is known as joint demand.

7. Composite demand: A composite demand can be described when goods and services are utilised for more than one cause. Example: Coal

Limitation of demand

Giffen Goods – For some inferior goods, when price increases demand also increases.

Veblen Goods (Prestige goods) – Expensive goods like luxury items may have more demand when price is high.

Expectation of Price Change – If people expect price to rise in future, they buy more now even if price is high.

Necessaries (Essential goods) – Goods like food or medicine are bought even if price increases.

Ignorance of Consumers – Consumers may not know the real price, so demand may not follow the law.

 

Conclusion

Demand refers to the quantity of goods or services that consumers are willing

 and able to buy at different prices. Generally, when price decreases demand increases, and when price increases demand decreases. Therefore, demand plays an important role in determining price and market behavior.

Frequently asked questions -FAQs

1. What is a demand schedule?
A demand schedule is a table showing the quantity of a good consumers are willing to buy at different prices.

2. What is a demand curve?
A demand curve is a graphical representation showing the relationship between price and quantity demanded.

3. Which factors influence demand?
Price, income of consumers, tastes and preferences, prices of related goods, and expectations of future prices.

4. What factors affect demand?
Price of the good, income of consumers, tastes and preferences, prices of related goods, and expectations of future prices.

5. What is the difference between demand and quantity demanded?
Demand refers to the overall relationship between price and quantity, while quantity demanded is the specific amount purchased at a particular price.

6. When does demand increase?
Demand increases when the price of a good decreases, income rises, or consumer preferences increase.

Reference

 Principles of Economics – N. Gregory Mankiw
A popular introductory economics textbook explaining demand, supply, and market equilibrium.

 Microeconomics – Robert S. Pindyck & Daniel L. Rubinfeld
Explains demand theory, consumer behavior, and elasticity in detail.

 Microeconomic Theory
A well-known advanced microeconomics textbook widely used in universities.

 Value and Capital – John Hicks
A classic work explaining consumer theory and demand in economic analysis.

 Principles of Microeconomics
Introduces the concept of demand, demand curves, and determinants of demand.

 

 

Glossary

  Demand – The quantity of a good or service that consumers are willing and able to buy at a given price and time.

  Law of Demand – When price increases demand decreases, and when price decreases demand increases.

  Demand Curve – A graphical representation showing the relationship between price and quantity demanded.

 Demand Schedule – A table showing different quantities demanded at different prices.

  Individual Demand – Demand for a product by a single consumer.

 Market Demand – The total demand of all consumers in a market.

 Derived Demand – Demand for a good that arises from the demand for another good.

 Joint Demand – Demand for two or more goods used together

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Dr.M.Petchiammal

Assistant professor

Department of Economics

Sadakathullah Appa College