Demand refers to the quantity of a commodity, the consumers are willing and able to buy at different prices during

a given time.

Three points to consider:

Meaning of Demand: desire to acquire willingness ability to pay Demand is the desire/ want backed by money Demand= (desire+ ability to pay + willingness to pay)

Definitions
According to Benham:

The demand for anything, at a given price, is the amount of it, which will be bought per unit of time, at that price.
According to Bobber:

By demand we mean the various quantities of a given commodity or service which consumers would buy in one market in a given period of time at various prices.

Demand Schedule
Demand Schedule: A tabular presentation showing different quantities of a commodity that would be demanded at different prices.
Price in Rs. 4 3 2 Quantity of apples in Kg. 1 2 3

Types of Demand Schedule

Individual Demand Schedule

Market Demand Schedule

Types of Demand Schedules

Individual Demand Schedule:

Shows various quantities of a commodity that would be purchased at different prices by a household.
Price in Rs. 40 30 20 Quantity of apples in Kg 1 2 3

Market Demand Schedule

Shows the various commodities that would be purchased at different prices by all the buyers of that

commodity. It is composed of the demand schedules of all the individuals purchasing that commodity.
Price in Rs. 40 30 20 Quantity demanded of apples in Kg Mr. X 1 2 3 Mr. Y 4 5 6 Mr. Z 7 8 8 Market demand in Kg 12 15 18

Meaning of Demand Curve:

A demand curve is a graphical depiction of the

demand of schedule or the plotting of the demand schedule on graph is called the demand curve. It is the curve showing different quantities demanded at alternative prices.

Individual Demand Curve

Negative slope Slopes downward

Types of Demand Curve:

Individual Demand Curve: Individual demand curve is a graphical depiction of the Individual demand schedule.
Market Demand Curve : Market demand curve is a graphical depiction of the market demand schedule.

Factors Determining Demand

D = f (Px, Y , T,E, Pr, P ) 1.Price of the commodity (Px)
Inverse relationship between the price of the commodity and the quantity demanded

2.Income of the Consumer (Y)

Determines the purchasing power of the consumer * Direct relationship between income and quantity demanded Normal goods (Y increases, demand increases) Inferior goods (Y increases, demand decreases) *

3. Consumers taste and preference (T) 4. Price of related commodities (Pr)

Substitute goods (P increases, demand increases) Complementary goods (P increases, demand decreases)

5. Consumer Expectation (expected change in price) 6. Size and composition of population (P) 7. Other Factors e.g., natural calamities

Substitute Goods
Demand Schedule
Price of tea Quantity demanded of coffee (Kg) Price of tea in Rs.

Demand Curve

25
20 15

25 20 15

5 4 3

D
3 4 5 Quantity of coffee in Kg

Complementary Goods
Price of Petrol
p1 p p2 D q1 q q2 No. of Cars D

law of Demand
Prof. Samuelson:
Law of demand states that people will buy more at lower price and buy less at higher prices, others thing remaining the same.

Ferguson:
According to the law of demand, the quantity demanded varies inversely with price.

Assumptions:
No change in tastes and preference of the consumers. Consumers income must remain the same. The price of the related commodities should not change. The commodity should be a normal commodity.

Exceptions of the law of demand :

Inferior goods/ Giffin Goods Articles of Distinction

Expectation regarding future prices

Emergencies Habit/ Preference

Why does demand curve slope downwards?

Law of Diminishing Marginal Utility Income effect

Substitution effect
Size of consumer group Different uses of a product

Change in Demand

Movement along the demand curve/ change in quantity demanded

Shift in demand curve/ change in demand

Expansion in demand

Contraction in demand

Increase in demand

Decrease in demand

Change In Demand
Expansion and Contraction in Increase or decrease in Demand demand Movement along the Shifts in demand curve

demand curve Also called change in quantity demanded Rise in demand due to fall in price of the commodity, ceterius paribus is known as expansion in demand or downward movement along the demand curve.

Also

called change in demand When demand increases due to change in other factor e.g. increase in income, decrease in price of complementary goods etc. with price of coommodity remaining constant is known as increase in demand.

 Fall in demand due to rise in

When demand decreases

price of commodity, ceterius paribus is known as contraction in demand or upward movement along the demand curve.

due to change in other factor e.g. decrease in income etc. with the price of commodity remaining constant is known as decrease in demand.

Extension and Contraction of Demand

A B C

Increase and Decrease in demand