Economics Project Work

Topic:Demand
 Contents

1. What is Demand?

2. Concept of Demand

3. Factors affecting Demand

4. Ceteris Paribus(Assumption)

5. Extension and Contraction of demand

6. Law of Demand

1. What is Demand?
Demand refers to how much (quantity) of a product or service is

desired by buyers.

If this desire is supported by willingness or an ability to purchase then

it is called (effective demand).

2. Concept Of Demand

Quantity demanded of a certain product which the consumer is willing

and able purchase at a certain price over a given period of time states

the concept

Simply is demand =desire + ability to pay + willing to spend

3. Factors affecting Demand

INCREASE IN DEMAND
A shift to the right in the demand curve can occur for a number of

reasons:

• An increase in disposable income, his can occur for a variety of

reasons such as higher wages and lower taxes

• An increase in the quality of the good e.g. computers are now

more powerful

• Advertising can increase brand loyalty to the goods and increase

demand

• An increase in the price of substitutes, e.g. if the price of Kodak

films increase the demand for Fuji films will increase

• A fall in the price of complements. E.g. a lower price of Play

Station 2 will increase the demand for compatible games.

A shift to the left in the demand curve can occur for a number of

reasons:

• A reduction in disposable income, this can occur for a variety of

reasons such as lower wages and higher taxes

• A decrease in the quality of the good .

• Poor and not effective Advertising can reduce brand loyalty and

decrease demand

• A decrease in the price of substitutes, e.g. f the price of Kodak

films reduce the demand for Fuji films will also reduce
 • An increase in the price of complements. E.g. a higher price of

Play Station 2 will decrease the demand for compatible games.

4. Ceteris
Ceteris Paribus

This is when all the other things do not change except price.

5-a. Extension in demand :

If the price would fall from P1 to P2 the quantity demanded would

increase from Q1 to Q2, it shows the movement along the curve from

point A to B which is called extension in demand

5-b. Contraction of demand :

If there is a increase in price from P1 to P2, then quantity demanded

would fall from Q1 to Q2, which shows the movement along the curve

A to B, which is called contraction in demand

6. Law of demand :

As price increases the quantity demanded decreases and vice-versa

with the condition of ceteris-paribus