THEORY OF DEMAND
Meaning of DemandDemand means desire/want for something ,but ineconomics demand refers to effective demand ie; theamount buyers are willing to purchase at a given priceover a given period of time.Demand is -:
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Demand is desire/want backed by money(Demand=desire+ ability to pay+ will to pay)
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Demand is always related to price and time (example:demand for oranges by a household at a price of Rs.50/kgis 5kg oranges /week)
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Demand maybe viewed as
Ex Ante
(intended/potentialdemand)or
Ex Post
(amt actual purchased/actualquantity demanded)Definition of demand The demand for a product refers to the amount of it which
Individual demand/Market demand
Individual demand :It refers to demand from the individuals /family/house-hold. It is a single consuming entity’s demand.Market demand: It refers to the total demand of all buyers ,taken together.It is the aggregate of the quantities of a product demanded by all theindividuals buyers at a given price over a given period of time-it is the sumtotal of individual demand functionMarket demand is more important from the business point of view, salesdepends on market demand ,so does planning future marketing strategyPrices are determined on the basis of demand for the product etc.The following table shows individual demands for eggs and how the marketdemand eggs at various prices is derived from it :
Price/doz RsA BCDETotal ddfor eggs
1013000492410078353101274652118657632235687432847985433
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