Unit 2.

Demand
 What is Demand?
• Demand/Quantity Demanded is the quantity of a product that
consumers are willing and able to buy at various prices per period
of time. Eg- Milk bought at Rs 20/kg per week

• Effective demand= willingness and ability to buy

• Individual Demand- demand of just one consumer

• Market Demand- sum of all individual demands of a product from
all its consumers
• Law of Demand- There is an inverse relationship between quantity
demanded and the price of a product, ceteris paribus.
• Ceterus Paribus- all other things remaining constant
 Demand Curve
• Demand curve is the graph depicting the relationship
between the price of a certain product and the amount of it
that consumers are willing and able to purchase at any given
price.

• It is a graphic representation of a demand schedule.

• Market Demand Curve- Demand curve that sums up the

demand of all the individuals in a market of a product. It is a
downward sloping curve.
 Movement along Demand Curve
• Movement ALONG the demand curve: change in
quantity demanded due to change in price ONLY
ceteris paribus (all other things affecting demand
remain unchanged)

- Extension of demand– increase in quantity demanded

due to lowering of price

- Contraction of demand- decrease in quantity

demanded due to increase in price
Movement along the Demand Curve