The presentation is a brief introduction of all the basic concepts of demand.
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Demand and Demand Function
Transcript
1. Demand and Demand Function
2. What is Individual Demand? Demand by a single consumer What
consumer purchases at a given price in a given period of time.
Backed by Purchasing Power
3. What are the Factors of Demand? Price of a Commodity Tastes
and Preferences Income of the Consumer Prices of Related Goods
(Substitutes and Complements)
4. What is Utility? Satisfaction a consumer derives. Demand = F
(Utility) Higher the utility, higher will be the demand
5. What is Quantity Demanded? Quantities of a commodity which
the consumers buy at a particular price It is a flow concept
Quantity demanded>Quantity available for sale Quantity demanded
= F(Price) Other determinants are assumed to be constant Higher the
price, lower will be the quantity demanded. Q = a-bP
6. What is a Demand Schedule? According to Samuelson, The Table
relating to price and quantity demanded is called the demand
schedule.
7. What are the types of Demand Schedule? Individual Demand
Schedule : Quantity of a given commodity which a consumer will buy
at all possible prices, at a given moment. Market Demand Schedule:
refers to different quantities of a commodity that all consumers in
the market are ready to buy at different possible prices of the
commodity at a point of time.
8. What is the Demand Curve? Graphic presentation of demand
schedule. The demand curve represents to maximum quantities per
unit of time that consumers will take at various prices-
Leftwitch
9. How the Demand Curve Looks like? Individual Demand Curve:
Represents different quantities of commodity demanded by a consumer
at different prices. Market Demand curve: Horizontal summation of
individual demand curves.
10. What is the Law of Demand? Other things being equal, if the
price of the commodity falls, the quantity demanded of it will
increase and vice-versa. Inverse relationship between price and
quantity demanded.
11. What are the Assumptions of the Law of Demand? Tastes and
Preferences of a consumer are constant. No change in the income of
the consumer Prices of related goods do not change No future
expectations of price.
12. Why is the demand curve sloping downwards? Law of
Diminishing Marginal Utility Income effect (positive or negative)
Substitution effect Size of the consumer group Different uses of a
commodity
13. What is the exception to the Law of Demand? Analyzed by Sir
Robert Giffen. Reflects increase in demand with the increase in
price.
14. What are the causes of Upward sloping Demand Curve?
Articles of Distinction Ignorance Giffen goods
15. What is Market Demand? Sum of individual demands The
factors of market demand are: Own price of a commodity Income of
the individuals Prices of related commodities Advertising
expenditure Number of consumers or population
16. How does the Market Demand Curve looks like?
17. What is the Relationship between Demand Function and Demand
Curve? Demand Function: Relationship between quantity and various
independent variables Demand curve: Relationship between Quantity
and price.
18. What is a Bandwagon Effect? Individuals demand depends on
others demand Commodity is in Fashion
19. What is a Snob Effect? Demand depends on the Prestige value
of a commodity. Exclusive Demand curve is steeper (Inelastic)
20. What is Change in Demand? Caused by factors other than
price. Causes a shift in the Demand curve May be either increase in
demand or decrease in demand
21. In what direction does the shift occur?
22. What are the Causes of Increase in Demand? Increase in
Income of the Consumer Increase in Price of Substitute goods
Decrease in Price of Complementary goods Favorable change in tastes
Expected increase in future prices Increase in number of consumers
Expected increase in future income
23. What are the Causes of Decrease in Demand? Decrease in
Income of the Consumer Decrease in Price of Substitute goods
Increase in Price of Complementary goods Un-Favorable change in
tastes Expected decrease in future prices Decrease in number of
consumers Expected decrease in future income
24. What is the demand for Durable goods? Durable goods give
services for a long period of time. Can be stored for long term
Have volatile demand
25. What are the features of Durable goods? Large inventories
are stored by producers, distributors and consumers Replacement of
Durable goods can be deferred.
26. What is the difference between Durable goods and Non-
durable goods? Durable Goods Purchased for getting services in
future periods. Fluctuations in demand is greater. Non-Durable
Goods Purchased for current consumption only. Fluctuations in
demand is less.
27. What is Derived Demand? Not demanded to satisfy the wants
directly. Are used to produce the consumer goods.