ENGINEERING

ECONOMICS
Jaspher Hermita
Date: 09/10/2021
https://www.slideshare.net/sujathabaranisujatha
WHAT IS DEMAND?
 DEMAND
• Demand is an economic principle referring to a consumer’s
desire to purchase goods and services and willingness to pay a
price for a specific good or service.

• Holding all other factors constant, an increase in the price of a

good or service will decrease the quantity demanded, and vice
versa.
Course Agenda
• Concept of Supply and Demand
• Types of Demands
• Nature of Demand
Course Objectives
• Understand the concept of Supply and Demand
• Determine the types of Demand
• Determine the nature of Demand
What happens when there is no
DEMAND?
NO DEMAND
NO SUPPLY
 TYPES OF DEMANDS
Demand can be three of types:
1.PRICE DEMAND
2.INCOME DEMAND
3.CROSS DEMAND
 PRICE DEMAND

• Price demand refers to the quantity of

particular product or service demanded at a
given price.
 INCOME DEMAND

• Income demand refers to the quantity of a

particular product or service demanded at a
given level of income of a consumer or
household.
 CROSS DEMAND

• Cross demand refers to the quantity

demanded for a particular product or
service, given the price of a related good.
• The related good may be complementary or
a substitute….
 EXAMPLE:

• Tire and Tube

 NATURE OF DEMAND
• The nature of demand is better understood when we see these variations as
follows:
• Consumer goods vs producer goods
• Autonomous demand vs derived demand
• Durable vs perishable goods
• Firm demand vs industry demand
• New demand vs replacement demand
 Consumer Goods vs Producer Goods
• Consumer goods are products bought for consumption by the average
consumer.
Example: bread, rice, apple, etc.
• Producer goods, also called intermediate goods, goods manufactured and
used in further manufacturing, processing, or resale.
Example: Machinery, tractor, etc.
 Autonomous Demand vs Derived
Demand
• Autonomous demand arises due to the natural desire of an individual to
consume the product.
Example: the demand for the service of a super-specialty hospital
• Derived demand is the demand for a good or service that results from the
demand for a different, or related, good or service.
Example: demand for steel leads to derived demand for steel workers, as
steel workers are necessary for the production of steel
 Durable vs Perishable goods
• Durable Goods are goods that give service for relatively long period.
Example: automobiles, books, household goods (home appliances, consumer
electronics, furniture, tools, etc.)
• Perishable Goods refers to items that have an expiration date, such food
that will go bad if not eaten in a certain amount of time.
Example: meat, poultry, fish, dairy products, and all cooked leftovers
 Firm Demand vs Industry Demand
• Firm Demand is the demand for products at a certain price over a period of
time from a single entity.
Example: a construction company may use 100tons of cement during the month
• Industry Demand the total or aggregate demand for the products of a
particular industry.
Example: the demand for cars of various brands, such as Toyota, Maruti Suzuki,
Tata, and Hyundai, in India
 New Demand and Replacement Demand
• New Demand is the demand for a new product and it is in addition to the
existing stock.
Example: new model car
• Replacement Demand is the item of purchased to maintain the asset in
good condition.
Example: replacement of car spare parts
Let’s Practice
• What happened to price of the product if the demand is higher than the
supply?
- When the demand is higher than the supply, the price will increase.
- When the supply is higher than the demand, the price will decrease.
THAT’S ALL THANK YOU