What is demand
What is market dmand and what is individual demand. explain both of these for 5 marker question with there possible types !!!!!! !!
Answers
DEMAND:-
Demand is a quantity of an commodity that a consumer is able and willing to buy at any given price in a specific time.
Here, demand can be define in two types:-
- Individual demand.
- Market demand.
Explanation:-
1. Individual demand:- a quantity of commodity that a consumer is able and willing to buy at any given price within a specific time.
⇒Determinations of individual demand:-
(a) Change in price- It states that there's always a inverse relationship between market demand and price. Like, when price increases—demand decreases and when price decreases—demand increases.
- NOTE*- here "determinations" refers to the impacts on demand of various factors.
(b) Change in related goods- Change in related goods which makes an impact on individual demand can be define in two types:
- Substitute goods- those goods which can replace the use of a particular commodity. Like Tea and Cofee, if coffee is more costly than tea, one would prefer tea over coffee since it will save the income of consumer. Hence here, change in the price of substitute good will directly proportional to the given commodity. Higher the price of substitute good, higher the demand of given commodity.
- Complimentary goods- those goods which are used together. Like Coffee and Milk, without milk there's no meaning of buying coffee. So, change in complimentary goods will inversely proportional to the price of commodity. Higher the price of complimentary goods, lower the demand of given commodity.
(c) Income of the consumer:- income of consumer also affects the individual demand. Consumers with higher income will have different demand than consumers with lower income.
(d) Taste and preferences:- taste and preferences of consumer also matters. Like a chocolate lover won't demand for icecream, no matter how much discount on icecream is going on.
(e) Expectations of change in price:- expectations of changing in price also affects the demand like if we think that price won't change in future days, our demand right now will become lower.
2. Market Demand:- a quantity of commodity that all the consumers are able and willing to buy at any given price within a specific time.
⇒ Determinants of Market demand:-
(a) Size of population:- if size of population is large then demand will be more and if population is low then demand will also be low.
(b) Distribution of national income:- if income is uneven divided then demand will be constant. Rich will have different demand and poors will have different.
(c) Climate factors:- as climate changes, demand will shift. Obviously in winter season one wouldn't prefer cold drink over tea. Cold drink will have less demand than tea.
(d) Change in price of commodity.
(e) Change in related goods.
(f) Income of consumer.
(g) Taste and preferences.
(h) Expectations of change in price.
- NOTE*- Last five factors will be defined same as in individual demand.
- Also note, determinants are very important part of individual and market demand, so I provided you here with them :)
DEMAND :-
- It is something which is an economic principle which refers to the user's will to purchase his/her goods or products. Demand rises with the increase in customers, if more customers are there, the demand for that particular item/place or anything increases.
TYPES OF DEMANDS :-
- Market demand
- Individual demand
MARKET DEMAND :-
- It can be defined as the total amount of goods that all the users or customers can afford to purchase in a market area. It refers to total quantities of the commodity. Some factors affecting are population, climatic factors, taste, productivity and discount offered. The market demand keeps on changing.
INDIVIDUAL DEMAND :-
- It can be defined as the demand particularly for a good or a service which is done by an individual. Some factors affecting are taste, productivity, discount given by the individual and income of the customer, more the income, more will be the demand.