“ If you can’t pay for a thing, don’t buy it.

If you cant
get paid for it, don’t sell it”

Benjamin Franklin
 Activity
Wants/needs/desire willingness Capacity to pay the price
Definition of DEMAND

“ Demand is thus defined as the Want,

need or desire which is backed by
willingness and ability to buy a
particular commodity, in a given
period of time”.
 Types of Demand

Demand

Direct/Derived Recurring and Complementary Individual and

Demand Replacement and Competing Market Demand
Direct Demand and Derived Demand
Direct Demand
When a commodity is demanded for own sake,(i.e.)by final
consumer. It is known as consumer good. since these goods are
demanded as they are, their demand is direct. Direct demand is also
known as Autonomous demand. Ex: TV, Refrigerator
Derived Demand
When a commodity is demanded for using it either as a
raw material or as an intermediary for value addition in any other good
or the same good , It is capital good and its demand is derived demand.
Ex: Mobile phone : Direct Demand
Machinery required to produce is Derived Demand
DD for Building leading to dd for construction materials. Construction
Materials are derived by the dd for new Buildings.
Recurring and Replacement Demand

Consumer
Goods

Durable
Consumable
(mobile phones, furniture,
(Recurring, Consumed in
houses- capital goods –
Frequent Intervals)
needs replacement)
 Complementary Demand

Goods are jointly demanded.

Goods which create joint demand are Complementary goods.
Demand for one commodity is dependent upon the demand for the
other one.
If purchase of cars increases, the demand for the petrol also
increases.
When more than one commodity is demanded to satisfy a single
want, such demand is called joint or Complementary demand.
 Competing Demand
• These are the goods which compete with each other because they
are the Substitutes.
• Goods that compete with each other to satisfy any particular want
are called substitutes.
• When a consumer is indifferent between two goods, they are called
as Close Substitutes.eg: Coke and pepsi, petrol driven car or diesel
driven car.
• The products which are not good substitutes. For e.g.: car and
motorbike, railways, airways or roadways.
• This categorization of goods helps the producer in taking decisions
to price,output,advertising etc.
Individual Demand and Market Demand

• Demand for an individual Consumer is normally

expressed as Individual Demand.
• Demand by all Consumers for its product known
as Market Demand.