For Classroom Use Only
This diagram illustrates a simple case in which there are only three consumers,Person A, Person B and Person C. Notice that the total quantity demanded in themarket is just the sum of the quantities demanded by each individual. In thisdiagram, Person A wished to buy 12 units, person B wishes to buy 15 units andperson C wishes to buy 7 units of commodity ‘X’ when the price is tk.3. Thus, at aprice of tk.3, the total quantity demanded in the market is 34 (=12+15+7) units of this commodity.Of course, this example is highly simplified since there are many buyers in most real-world markets. The same principle though would hold: the market demand curve isderived by adding together the quantities demanded by all consumers at each andevery possible price.
CATEGORIES OF DEMAND(a) DEMAND FOR CONSUMERS’ GOODS AND PRODUCERS’ GOODS
Consumers’ goods are goods used for final consumption, e.g. food items, readymadeclothes, houses. Producers’ goods are used for production of other goods,consumers’ or producers’, e.g. machines, tools, raw-materials. Demand forconsumers’ goods is also termed as direct demand, for these goods are used directlyfor final consumption. Demand for producers’ goods are demanded not for finalconsumption but for the production of other goods. The distinction betweenconsumers and producers goods is somewhat arbitrary, for whether a good is aconsumers’ good or producers’ good depends upon its use. For example, if wheat isused to make eatables in a kitchen, it is a consumer good while if the same wheat isused for making bread in a bakery, then it is a producers’ good. However, thisdistinction is useful because, among other factors, demand for a consumer gooddepends on consumers’ income while that for a producers’ good depends on theoutputs of the industries using this product as an input.
(b) PERISHABLE AND DURABLE GOODS’ DEMAND
Both consumers’ and producers’ goods are further divided into perishable (non-durable) and durable goods. Perishable goods are those, which can be consumedonly once, while durable goods are those, which can be used more than once over aperiod of time. For example, sweets, bread, and milk are perishable consumers’ goods; consumables like coal, oil and raw materials are non-durable producers’ goods; furniture, refrigerator, and car are durable consumers goods; and machines,tools, and factory buildings are durable producers’ goods. This distinction is usefulbecause non-durable products present more complicated problems for demandanalysis than durable products. Sales of non-durables are made largely to meetcurrent demand, which depends on current conditions. Sales of durables, on theother hand, add to the stock of existing goods, whose services are consumed over a
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