PPT

SUBJECT – MANAGERIAL ECONOMICS

CLASS – BBA II

SUBMITTED TO – NEELAM PATHANIA

SUBMITTED BY - ARYAN
 DEMAND
• ‘Demand’ is the very first and basic concept
which we learn in the subject of Economics.
• Demand is the number of goods that the
customers are ready and willing to buy at
several prices during a given time frame.
 DETERMINANTS OF
DEMAND

Individual demand Market demand

function function
Dx = f ( Px , Pr , Y , T , E ) Dx = f ( Px , Pr , Y , T , E ,
P , Yd )
• Own price of the commodity (Px)– When the
price of the commodity increases , the quantity
demand (Qd) falls. On the other hand the price
of the commodity decrease and the quantity
demand rises.
• Price of related goods (Pr) – Related goods can be divided
into two types :
(a) Substitute goods – These are those goods which can be
substituted for each other , increase in the price of one
causeS increase in the demand for the other and vice
versa. For example – Vivel soap and cinthol soap.
(b) Complementary goods – Goods which completes the
demand for each other and are demaned together. If the
price of one falls , the demand for the other increases
and vice versa. For example – DVD and DVD player .
• Income of the consumer (Y) – Change in the income of the
consumer also influences demand for each others . It can
be explained with three types of good :
• (a) These are those goods which experience an increase in
the demand due to increase in the income of the
consumer and vice versa. For example – Food and
clothing .
(b) Inferior goods – Goods which causes increase in demand
when there is decrease in the income of the consumer and
vice versa .
For example – Canned foods
(c) Necessity goods – Consumer will buy regardless of the
changes in their income levels.
For example – matchbox and salt.

Necessity good
Inferior good
• Taste and preferences – Demand for the goods and services
aslo depends upon the individual taste and preferences . If
the tastes and preferences are positive then demand
increased and vice versa .
• For example - change in fashion and climate.
• Expectations (E) – If the consumer expects that price will
rise high of a good in future , he will buy more goods .
Contrary , if consumer expects that price of good
decrease in future, he will buy less goods.
For example – If the price of a computer is expected to fall
next month, the demand for computers today decreases .
• Population (P) – If the population increases the
demand also increases and on the other hand
population decreases then the demand falls. Increase
and decrease in the population depends upon death
rate and birth rate every year.
• Distribution of income (Yd) – If the income is equitably
distributed, there will be more demand but when the
income is not equitably distributed , there will be less
demand.
For example, if the CEO earns ₹10,000,000 per year and
average worker’s pay is ₹50,000, the wage ratio is 200:1.

Thank You !