Requisites:
f. Desire for specific commodity.
g. Sufficient resources to purchase the desired commodity.
h. Willingness to spend the resources.
i. Availability of the commodity at
(i) Certain price (ii) Certain place (iii) Certain time.
Kinds of Demand
1. Individual demand
2. Market demand
4. Income demand
- Demand for normal goods (price –ve, income +ve)
- Demand for inferior goods
4. Cross demand
- Demand for substitutes or competitive goods (eg.,tea &
coffee, bread and rice)
- Demand for complementary goods (eg., pen & ink)
Qdx = f (Px, Pr ,Y , T, D, …)
Demand Schedule
Demand Schedule: a tabular presentation showing different
quantities of a commodity that would be demanded at
different prices.
Quantity
Of apples
Demand Curve
The demand curve slopes downwards from left to right
which indicates that there is an inverse relationship
between price and quantity demanded.
Types of Changes
Chief Characteristics:
5. Inverse relationship.
6. Price independent and demand dependent variable.
7. Income effect & substitution effect.
Assumptions:
No change in tastes and preference of the consumers.
• Consumer’s income must remain the same.
• The price of the related commodities should not change.
• The commodity should be a normal commodity
Market Demand versus Individual
Demand
0 4 8
Shifts in the Demand Curve
• Consumer income
• Prices of related goods
• Tastes
• Expectations
• Number of buyers
Shifts in the Demand Curve
Change in Demand
• A shift in the demand curve, either to the left or
right.
• Caused by any change that alters the quantity
demanded at every price.
Shifts in the Demand Curve
Price of
Ice-
Cream
Increase
in demand
Decrease
in demand Demand
curve, D2
Demand
curve, D1
Demand curve, D3
0
Quantity of
Ice-Cream
Shifts in the Demand Curve
Consumer Income
• As income increases the demand for a normal good
will increase.
• As income increases the demand for an inferior
good will decrease.
Consumer Income
Normal Good
Price of
Ice- An increase
Cream in income...
3
Cone Increase in
2.50 Demand
2
1.50
1 D2
.50
D1
0 1 2 3 4 5 6 7 8 9 10 11
Quantity of ice cream cone
Consumer Income
Inferior Good
Price
of Ice-
Cream An increase
Cone in income...
Decrease
In Demand
D1 D
0
Quantity of Ice Cream
Cone
Shifts in the Demand Curve