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 DEMAND

A)DEMAND AND SUPPLY:

#DEMAND DEFINITIONS:

Demand may be defined.As the quantity of our commodity that a consumer is able and willing to buy at each possible price over a given period of time. 

It's initial elements of demand are quantity, ability, willingness, prices and period of time. 

#Demand law:

The law of demand is one of the most fundamental concepts in the economics. It works with the law of supply to explain how market economies allocate resources and determine the prices of goods and services that we Observes in everyday transaction. 

The law of demand It's the inverse relationship between the price of a good and the quantity of it demanded is observed in reality with such regularity It is known as the law of demand.The law of demand holds because when the price of goods increases consumer tend to buy less or it and more of the goods.

Demand is derived from the law of Diminishing marginal utility.The fact that consumers use economic goods to satisfy their Most urgent needs first. 

The law of demand states that the quantity purchased varies inversely with price. In other words, the higher the price, the lower the quantity demanded. This occurs because of diminishing marginal utility. 

#Factors affecting demand:

Price of the given quantity.It is the most important factor affecting demand for the given commodity. Generally, there exists an inverse relationship between price and quantity demanded. It means and price increase. The quantity demanded falls due to decrease in the satisfaction level of consumers.example the price of a given commodity increases the quantity demanded with fall as the satisfaction.

Price of related goods-Demand for the given community is also affected by the change in price of the related goods.Example if the price of a substitute good.Coffee increases, then demand for the given commodity tea will rise as T will become relatively cheaper in comparison to coffee.

Income of the consumerDemand for commodity is always affected by income of the consumer.

Tastes and preferences-Taste and preferences of the consumer directly influence the demand for a commodity. They include changes in fashion, customs, habits.

Expectations of change in price in future-If the price of a certain commodity is expected to increase in near future, then people will buy more of commodity than what they normally buy. 

#Demand function-

Demand function is what describes a relationship between one variable and its determinants.It describes how much quantity of goods is purchased as alternatively, prices of goods and related goods, alternative income levels and alternative values of the other valuables affecting demand.

The principal variables that influence the quantity demanded:

  1. The price of the goods.
  2. The prices of related goods.
  3. Taste and preferences.
  4. The income of consumer.
  5. Expected price of product in future periods.
  6. The number of consumers in the market. 

note:The relationship between quantity demanded and these above factors is referred to as the general demand function. 

#Elasticity of demand:

  • Price elasticity of demand. 
  • Elasticity is equals to responsiveness of consumer due to the price change of any commodity.
  • Alfred Marshall-Elasticity of demand may be defined as a percentage change in quantity demanded to the percentage change in price.

  1. Perfectly elastic demand.
  2. Perfectly inelastic demand.
  3. Relatively elastic demand.
  4. Relatively inelastic demand.
  5. Unitary Inelastic demand. 

#Perfectly elastic demand-

Perfectly elastic demand means when the percentage of change in quantity demanded is infinite, even if the percentage of change in price is 0, the demand is set to be perfectly elastic. 

Quantity demanded =∞

#Perfectly inelastic demand:

No change in quantity demanded

#Relatively elastic demand:

When the percentage change in quantity demanded is greater than the percentage change in price, the demand is set to be elastic. 

Quantity demanded.> Price

#Relatively inelastic demand:

More change in the price of the goods, but less change in demand for the goods. 

Quantity demanded.<Price

#Unitary elastic demand:

The proportionate of change in price of goods and services is equal to the proportionate change of demand for goods and services. 

Quantity demanded.=Price

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