1. Demand Analysis Unit II

2. Contents A: Concepts: Need, Desire, Want and Demand; Individual Demand and Market Demand; Law of Demand, Demand Function Change in Demand and Shift in Demand…

3. Need, Desire, Want and Demand A human being needs.. Air, water, soil, food… A poor man desires for aeroplane… Want is a desire backed by ability and willingness to satisfy it… Demand is quantity of commodity a person is willing and is able to buy at a particular price at a specific period of time..

4. Individual Demand and Market Demand Demand of A,B,C… i.e. of individual units… Market Demand: aggregate demand of the units comprising the market.. Price of product P Demand of ADemand of BMarket Demand 2101121 57714 74610

5. Law of Demand As the price increases the quantity demanded decreases and vice versa, ceteris paribus..

6. Factors affecting Demand.. Price of commodity Price of other commodities (substitute and complementary goods) Income of consumer Wealth of consumer Demography Other factors…

8. Change in Quantity Demanded Also called Expansion and contraction of demand…

9. Shift in Demand Function. Change in demand due to other factors… Increase and decrease in demand..

10. Demand Function (only Price impact)

11. Demand Function (for all factors)

12. Demand Function

13. Apply Demand Function… Qa= 120-2(p) At Rs 50…..Q=? At price Rs 40 Q= Does Law of demand apply here Highest sale possible:…. Price at which demand would be 20…..

14. Lets predict….. From past data u know market demand function: Q=2000million-10(P) Find: demand at price 12 At price: 15. 10. 20. Highest demand Highest price to sell 1000 products atleast… To sell 1500 products atleast…

15. Lets move forward… If 7 th pay commission increases salary of employees by Rs. 500 each… what would be impact on following demand function: Q=1000-2(P)+1(Y) P=100, Y=10000. old market demand?..... New would be… If income slope changes to 2… then new Q=???

16. Now u speak… Impact of substitute goods price rise…. Impact of complementary good price fall… Now reverse gear….

17. Example time…. Price of online books decrease…. Hardcopy books demand……… Price of onion increase….. Demand of ready to use masala…… Price of rail ticket increase…. Demand of air travel…..

18. Think….. -Form a group of 5 and write ur names on paper: 1 min -Take an article to describe demand… write it in capital letters…..: 1 min -Make demand function: show relationship between: Price, Substitute price, Income : 2 min -Speak aloud:….. - Give the paper to me….

19. Supply Quantity of commodity a producer is willing to sell over a specific time. Factors affecting Supply: – Price of commodity – Technology – Input price – Weather conditions..

20. Supply: Law, Schedule and Curve As price goes up supply increases ceteris paribus Supply and demand Schedule

21. The equilibrium Point at which QS equals QD at particular price

22. Change in equilibrium If price increases.. If tax increases for supplier only… If calamity leads to shortage.. And hoarding of goods..

23. Find equilibrium Q Qd= 120-2(P) Qs=80+2(P) Steps: 1.Equate 2.Find P’s value 3.Insert P in Q equation…

24. Find Q Qd= 200-3P Qs=100+3P ……

25. Apply.. Price of $= 65…. Price of education in US has increased.. What does management of US MBA colleges do to keep the demand at same level…. ………