CURVE OF DEMAND FOR

AGRICULTURAL PRODUCTS
AND FOOD

Khadicha Alakbarova
 Demand
Demand is the amount of a good that consumers are willing
and able to buy at various prices.
Desire refers to people's willingness to own a good
Determinants of Demand

Price
 Consumers’ income
 Tastes and preferences
 Expectations about future
 prices
Prices of related goods (substitutes and
 complements)
Number of consumers
Antu Panini Murshid--Principles of
09/02/09 Macroeconomics
 Price
• Price is the most
important
determinant of
demand.
• A “demand curve”
plots combinations
of prices and
quantity demanded.
 The Law of Demand
All else equal, the quantity demanded is negatively related to price

8
 The Demand for leather

Price Demand Curve Demand

for leather for
100 leather
80
Price Quantity
($) (pcs)
60
100 2,000
40
80 4,000
20
D 60 6,000
40 8,000
2,000 4,000 6,000 8,000 10,000

Quantity (pcs of leather) 20 10,000

Graphing a Movement along the Demand Curve

 Suppose that the price

Price
per leather is $80…

100  What would happen if

A the price decreases
80
to $40?
60
Quantity demanded would
B increase to 8,000
40
(movement to point B)
20
D

2,000 4,000 6,000 8,000 10,000

Quantity (pairs of shoes)
12
Price Changes: Movement along the Demand Curve

A change in price will lead to a movement along the

demand curve
A price induced change in demand is referred to as a
change in quantity demanded

Antu Panini Murshid--Principles of

09/02/09 Macroeconomics 11
 Shifts in Demand

Any factor other than price that results in a change in

demand, will cause a shift in the demand curve
Examples:

Antu Panini Murshid--Principles of

09/02/09 Macroeconomics 13
 Income

Changes in income
can increase or
decrease demand.
What happens in demand if income
increases?
 Income:
How does income affect demand?

An increase in income increases ability to buy

 Normal goods
 For normal goods an increase in income leads

to an increase in demand
 Decreases ability to buy Inferior goods
 For inferior goods an increase in income
leads to a decrease in demand

Antu Panini Murshid--Principles of

09/02/09 Macroeconomics
 Income
• A good whose demand decreases with an
increase in income is called an “inferior
good.”
• A good whose demand increases with an
increase in income is called a “normal
good.”
 Graphing a Shift in the
Demand Curve
Suppose initially price
Price of leather is $80 and
quantity demanded is
4,000
100
What happens if
A B
80 income increases?
 If leather is a normal
60 good, demand will
increase
40  Suppose at $80,
D1 quantity demanded
20 increases to 8000 (point
B)
 The demand curve will
2,000 4,000 6,000 8,000 10,000 shift to the right
Quantity (pcs )
 Tastes

• Changes in tastes and preferences will

affect demand, as they affect consumers’
desires to purchase goods and services,
• Demand curves can shift due to changes in
tastes over time.
For example, demand for cereal may be
high in the morning but low at night.
 Tastes and Preferences
Factors identifying tastes and preferences:
 social
 cultural factors,
 effect of advertising
If an individual is generally habituated to cigarettes, coffee
or vine; due to his strong preferences for this products, his
demand would remain high.
Tastes and Preferences in Islamic countries
Tastes and Preferences Effect of advertising

Antu Panini Murshid--Principles of

09/02/09 Macroeconomics
 Future Expectations

• An expectation that future prices will increase

may lead to an increase in current demand
• An expectation that future prices will decrease may
lead to a decrease in demand today as consumers’
postpone consumption till later

Antu Panini Murshid--Principles of

09/02/09 Macroeconomics
Future Expectations
 Substitutes
• Products that can be used
to replace each other.
• A good that causes an
increase in the demand for
another good when its
price increases is called a
“substitute good.”
 Complements
• Products that complement each other and are often
purchased in conjunction with each other

• A good that causes a decrease in the demand for

another good when its price increases is called a
“complementary good.”

Antu Panini Murshid--Principles of

09/02/09 Macroeconomics
Complementary products
Complementary products
 Number of buyers
An increase in the number of potential buyers
will increase the demand for the good-food.
 THANK YOU !
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