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DEMAND ANALYSIS
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of Demand 2. Determinants of Demand 3. Law of Demand 4. Exceptions to the Law of Demand 5. Elasticity of Demand
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1. MEANING OF DEMAND
Demand for a commodity refers to the quantity of the commodity which an individual consumer or a household is willing to purchase per unit of time at a particular price. y Demand for a commodity impliesy
Desire of the consumer to buy the product or service, Willingness to buy the product or service, and Ability to purchase the product or service
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2. DETERMINANTS OF DEMAND
I. General Factors
Price of the Product Income of the Consumer Taste and Preferences of the Consumer Prices of the related goods (substitutes and complementary goods)
3. LAW OF DEMAND
Law
of Demand states that higher the price, lower the quantity demanded, and vice versa when other things constant.
Goods Commodities which are used as status symbols Addictive Products Expectations of change in the price of the commodity. Etc
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5. ELASTICITY OF DEMAND
Elasticity of Demand (Ed) is defined as the percentage change in quantity demanded caused by some percent change in the demand determinant under consideration.
Rs.5
Price
Rs.4
50
100
10 Quantity Demand
Rs.5
Price
Rs.3
50
75
Quantity Demand
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14 12 10 8 6 4 2 D
10
15
20
25
30
Quantity
12
30 25 20 15 10 5
10
15
20
25
Quantity
13
Rs.5
Price
Rs.2.5
50
100
Quantity Demand
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A measure of the extent to which the demand for a good changes when income changes. % Change in Quantity Demanded % Change in Income
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A measure of the extent to which the demand for a good changes when the price of a substitute or complement changes. % Change in Quantity Demanded % Change in Price of one of its
substitutes or complements
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Thank You
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