Demand Analysis Am Mended)

DEMAND ANALYSIS LAW OF DEMAND DETERMINANTS TYPES

WHAT IS DEMAND ? The demand implies “a desire for a commodity backed by the ability and willingness to pay for it.”

Demand consists of :- Desire to buy the product  Ability to pay for the product  Willingness to pay for the product

LAW OF DEMAND HIGHER THE PRICE, LOWER THE DEMAND IS. LOWER THE PRICE , HIGHER THE DEMAND IS. (when all other things remain constant) Y P R

P P1

I C E

0

Q

Q1

QUANTITY

X

ASSUMPTIONS OF THE LAW  No change in the income of the consumer  No change in the price of the related goods  No expectation of change in prices in near future  Consumer tastes and preferences remain same  No substitute for the good is available

Exceptions to the Law The law of demand does not hold true in the following cases : Goods which are purchased only for specific purposes like gold, diamond etc.  In case of inferior and Giffin goods.  In case of necessities  In case of fear of shortage of the goods

Types of Demand

DETERMINANTS OF DEMAND  PRICE OF THE GOOD  PRICE OF RELATED GOODS  INCOME OF CONSUMER  POPULATION  TASTES AND PERFERENCES

 CLIMATE AND WHEATHER  CONSUMER EXPECTATIONS  ADVERTISEMENT EXPENDITURE  AVAILABILITY OF GOODS  MONEY SUPPLY

Thank you

Submitted by :-Pankaj Kaushal