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Chapter 02 - Demand Analysis

Chapter 02 - Demand Analysis

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Published by phannarith

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Published by: phannarith on Aug 26, 2010
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11/07/2012

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1
Chapter-2
Demand and Supply Analysis
2
Demand Analysis
How important in decision-making?
1.
Provides the basis for analyzingmarket influenceson the firm’sproducts.
2.
Provides guidance in the manipulationof demand.
 
2
3
Characteristics of Demand
1.
Desire for a commodity
2.
Willingness to pay
3.
 Ability to pay
Demand is always with reference to:
1.
Price
2.
Period of time
3.
Place
4
Determinants of Demand
(Factors Influencing Demand)
Price of the own commodity (P)
Income of the consumer (Y)
Taste & Preference of the Consumer (T)
Price of Related Commodities (P
r
)
Price of Substitutes (P
s
)
Price of Complementary (P
c
)
Expectation of the Consumer (E)
 
3
5
Expectation of the Future Price (E
p
)
Expectation of the Future Income (E
y
)
Number of Consumers (N)
Distribution of Consumers (D)
 Advertisement (A)
Demand Function
(An algebraic expression of the relationbetween demand for a commodity & itsdeterminants)D = f (P, Y, T, P
s
, P
c
, E
p
, E
y
, N, D, A…..n )
6
Law of Demand
 “Other things remaining the same,there is an inverserelationship betweenthe price of a commodity & its quantitydemanded”.
Demand Schedule
 Various quantities of a commoditydemanded at different price levels.
IDS: Individual Demand Schedule
MDS: Market Demand Schedule

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