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WHAT IS DEMAND?
Is it Desire or Want?
DEMAND
Thus Demand Comprises of
1. Desire for commodity
2. Sufficient resources i.e money to satisfy
desire
3. Willingness to spent that money.
LAW OF DEMAND
Prof. Samuelson: Law of demand states that
people will buy more at lower prices 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:
1. The price of the related commodities should not
change.
2. Consumers income must remain the same.
3. No change in tastes and preference of the
consumers.
4. Expectations should be constant.
M.D.S
EXPLANATION OF LAW OF
DEMAND
Individual DC
Market DC
LAW OF DMU
INCOME EFFECT
SUBSTITUTION EFFECT
DIFFERENT USES
SIZE OF CONSUMER GROUP
EXCEPTIONS TO LAW OF
DEMAND
1.
2.
3.
4.
5.
DETERMINANTS OF DEMAND
1.
2.
3.
4.
5.
6.
DETERMINANTS OF DEMAND
Price of the Commodity
Price of Related goods
1.
2.
Substitute Goods
Complementary goods
i.
ii.
3.
i.
ii.
iii.
Normal goods
Inferior goods
Necessities of life
DETERMINANTS OF DEMAND
4.
5.
6.
CHANGE IN DEMAND
It is of two types:
Movement along the same
demand curve
Extension
in demand
Contraction
in demand
Increase in
demand
Decrease in
demand
CONTRACTION IN DEMAND
DECREASE IN DEMAND
Meaning
Demand
Schedule
Demand Curve
Nature
There is a
downward/leftward/inwar
d shift in the demand
curve.
Factors
TYPES OF DEMAND
Autonomous demand & Derived demand:
Spontaneous demand for goods which is based
on the urge to satisfy some wants directly.
Derived demand: when demand for a product is
tied to the purchase of some parent product, it is
called derived demand.
2. Short run & Long run demand
3. Price demand, Income demand and Cross
demand
4. Individual demand and Market demand
1.
DEMAND FORECASTING
METHODS OF DEMAND
FORECASTING
The most commonly used techniques of
demand forecasting are:
1. Buyers Survey.(opinion survey): it is to
ask customers, what they are going to buy
for the forthcoming period.
2. Delphi Method: It consists of an attempt to
arrive at a consensus in an uncertain area
by questioning a group of experts
repeatedly until the responses appear to
converge along a single line or issues
causing disagreement are clearly defined.
3.
4.
5.
6.
7.
Accuracy
Simplicity
Economical
Availability
Timeliness.