Understanding Demand in Economics

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Demand
 
Demand
Demand
 is a quantity of a commodity which a consumer wishes to purchase at a
given level of price and during a specified period of time.
In other words, demand for a commodity refers to the desire to buy a commodity
backed with sufficient purchasing power and the willingness to spend.
Desire
 is just a wish for a commodity and a person can desire a commodity even if
he does not have the capacity to buy it from the market whereas demand is desire
backed by purchasing power that is to say whatever an individual is willing to buy
from the market in a given period of time at a given price. A poor person can desire
to own a car but that will not become a demand because he does not have the
purchasing power to buy a car from the market.
Factors affecting demand:
(a)
Price of the commodity:
 Inverse relationship exists between price
of the commodity and demand of that commodity.
It means with the rise in price of the commodity the demand of
that commodity falls and vice-versa.
(b) Price of related goods: It may be of two types:
1.
Substitute goods
2.
Complementary goods
Factors affecting demand:
(i)
Substitute Goods:
 Substitute goods are those goods which can
be used in place of another goods and give the same satisfaction
to a consumer.
There would always exist a direct relationship between the price of
substitute goods and demand for given commodity.
It means with an increase in price of substitute goods, the demand for
given commodity also rises and vice-versa. For example, Pepsi and
Coke
.
Factors affecting demand:
(ii) Complementary Goods:
 Complementary goods are those which
are useless in the absence of another goods and which are demanded
jointly.
There would always exist an inverse relationship between price of
complementary goods and demand for given commodity.
It means, with a rise in price of complementary goods, the demand for
given commodity falls and vice-versa. For example pen and refill.
Factors affecting demand:
(c) Income of a Consumer: There are three types of goods:
1.
For Normal Commodity: For normal commodity, with a rise in income, the
demand of the commodity also rises and vice-versa. Shortly, direct relationship
exists between income of a consumer and demand of normal commodity.
2.
For Inferior Goods: For inferior goods, with a rise in income, the demand of the
commodity falls and vice-versa.
Shortly, inverse relationship exists between income of a consumer and demand of
inferior goods.
3.
For Necessity Goods: For necessity goods, whether income increases or
decreases, quantity demanded remains constant.
Factors affecting demand:
(d) Taste and Preferences of the Consumer:
 Tastes, preferences and
habits of a consumer also influence its demand for a commodity.
For example, if Black and White TV set goes out of fashion, its demand
will fall. Similarly, a student may demand more of books and pens
than utensils of his preferences and taste.
Miscellaneous: Some of the other factors affecting the demand of a
consumer are: Change in weather, change in number of family
members, expected change in future price, etc.
THANK YOU
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Demand in economics refers to the quantity of a commodity that consumers wish to purchase at a given price level. It is the desire backed by purchasing power, distinguishing it from mere desire or wish. Factors influencing demand include the price of the commodity, prices of related goods (substitutes and complements), and the income of consumers. The relationship between these factors and demand varies based on the type of goods involved. Understanding these dynamics is crucial for businesses and policymakers in predicting market behavior and making informed decisions.


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  1. Demand

  2. Demand Demand is a quantity of a commodity which a consumer wishes to purchase at a given level of price and during In other words, demand for a commodity refers to the desire to buy a commodity backed with sufficient purchasing power and the willingness to spend. Desire is just a wish for a commodity and a person can desire a commodity even if he does not have the capacity to buy it from the market whereas demand is desire backed by purchasing power that is to say whatever an individual is willing to buy from the market in a given period of time at a given price. A poor person can desire to own a car but that will not become a demand because he does not have the purchasing power to buy a car from the market. a specified period of time.

  3. Factors affecting demand: (a) Price of the commodity: Inverse relationship exists between price of the commodity and It means with the rise in price of the commodity the demand of that commodity falls and vice-versa. (b) Price of related goods: It may be of two types: 1.Substitute goods 2.Complementary goods demand of that commodity.

  4. Factors affecting demand: (i) Substitute Goods: Substitute goods are those goods which can be used in place of another goods and give the same satisfaction to a consumer. There would always exist a direct relationship between the price of substitute goods and demand It means with an increase in price of substitute goods,the demand for given commodity also rises and vice-versa. For example, Pepsi and Coke. for given commodity.

  5. Factors affecting demand: (ii) Complementary Goods: Complementary goods are those which are useless in the absence of another goods and which are demanded jointly. There would always exist an inverse relationship between price of complementary goods and demand It means,with a rise in price of complementary goods,the demand for given commodity falls and vice-versa.For example pen and refill. for given commodity.

  6. Factors affecting demand: (c) Income of a Consumer: There are three types of goods: 1.For Normal Commodity: For normal commodity, with a rise in income, the demand of the commodity also rises and vice-versa. Shortly, direct relationship exists between income of a consumer and demand of normalcommodity. 2.For Inferior Goods: For inferior goods, with a rise in income, the demand of the commodity falls Shortly,inverse relationship exists between income of a consumer and demand of inferior goods. 3.For Necessity Goods: For necessity goods, whether income increases or decreases,quantity demanded remains constant. and vice-versa.

  7. Factors affecting demand: (d) Taste and Preferences of the Consumer: Tastes, preferences and habits of a consumer also influence its demand for a commodity. For example,if Blackand White TV set goes out of fashion,its demand will fall. Similarly, a student may demand more of books and pens than utensils of his Miscellaneous: Some of the other factors affecting the demand of a consumer are: Change in weather, change in number of family members,expected change in future price,etc. preferences and taste.

  8. THANK YOU

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