Demand and law of Demand

                                        DEMAND

 

Demand is desire for the satisfaction of which a consumer has resources and he is willing to part with the resources

1-their should be a desire to have a commodity

2-there should be resources to buy the commodity

3-there should be willingness to spend the resources

4-the commodity desired should be available

 

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we all know what is demand, everyone have demands of products in their life

 

1-derived demand-when the demand of anything is derived from another demand for example

if the demand of leather shoes increases. the demand of workers of making leather shoes will automatically increase.

 

2-composite demand-when one product demand used for other uses also is composite demand. for example coal can be used for heating,cooking,railway engine .so demand of coal will be used for several uses.

 

3-joint demand-when 2 or more product are used for one satisfaction of demand is joint demand for example- if we have to make tea so 2 things we need tea and sugar so both we need to satisfy one demand

 

and direct demand is simple demand like demand of pen,mobile,lights etc

 

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Law of demand says if price will increases the demand will decreases

and if price of the products will decreases the demand will increases

 

P=1/Q       (where P is price of commodity and Q is demand of the commodity)    

 

Assumption

1-Consumers income remain the same.

2-The consumer's habits, tastes and preference do not change

3-the prices of the substitutes and complements remains the same

 

 

            Price of the commodity                         Demand (in Qnts.)

                         10                                                        120

                         20                                                        85

                         30                                                        60

                         40                                                        40

                         50                                                        30

                         60                                                        20

 

this shows increase in price makes decreases in demand. And the figure will be like that. So this is LAW OF DEMAND

 

this is known as demand curve

Limitation of law of demand

if the rumours starts that price of petrol will increase from next day. So the demand of petrol will increase today
 
income of the consumer also makes the change in demand

lack of consumer understanding also changes the demand