Presented by:Anup Neupane.

Koshish Sen.Anish Maharjan.

Sarashwoti Gharti Magar.Pratigya Kafle.

1. Demand.2. Desire.3. Types of demand.4. Determinant of demand.5. Law of demand. 6. Law of supply.7. Interarction between demand and

supply.

Topics

Demand Amount of a commodity or

services which an individual buyer is willing and able to purchase at a given price during a certain period of time.

A desires which is backed up by willingness and ability to pay.

Mathematically: Qd=f(P, Pa, Pb ,T, Y,

Sp……..etc)

DesireDesire is a wish to have something.

Resource is not essential to have desire.

Desire has no limitation.

For example: a beggar might have desire to visit USA.

Types of demand1. Price of demand.2. Income demand.3. Cross demand.4. Joint demand.5. Composite demand.

Other thing remaining same, price demand refers various quantities of a commodity which a consumer would demand at various level of prices of the commodity.

It shows the inverse relationship between price and quantity demanded.

Mathematically, DX=f(PX)

Price demand.

PRICE OF COMMODITY QUANTITY DEMANDED OF COMMODITY

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10203040

Price demand

Quantity

Pric

e

Income demand• Income demand shows the relationship between

consumer’s income and quantity demanded for a commodity. It include various quantities of the commodity which are bought at various levels of income, other things remaining the same.

• In the case of the normal goods, it shows positive relation between price and quantity demanded

• In the case of inferior goods, it shows negative relationship between income and quantity demanded.

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100

200

300

400Normal goods

Pric

e

5 10 15 20 25 30 350

100

200

300

400Inferior goods

Pric

e

Income of consumer Quantity demanded for normal goods

Quantity demanded for inferior goods

100 10 30

200 20 20

300 30 10

5 10 15 20 25 30 350

100

200

300

400Normal goods

Pric

e

Cross demando Cross demand shows the relationship between

price of commodity and quantity demand of its related commodity, other things remaining same.

o In the case of substitute goods, it shows the positive relationship between price of commodity and quantity of its substitute goods.

o In the case of complementary goods, it shows the inverse relationship between price of commodity and quantity of its complementary goods.

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200

300

400Substitutes goods

Pric

e

5 10 15 20 25 30 350

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200

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400Complementary

goods

Pric

e

Price Quantity demanded for substitutes goods

Quantity demanded for complementary goods

100 10 30

200 20 20

300 30 10

Joint demand. If different commodities are demanded for a single purpose it

is called joint demand. The demand for complementary goods is joint demand

because complementary goods and demanded jointly to satisfy a want.

Composite demand.o In our daily life some good are used for multiple purposes.o Demand for such goods is known as composite demand.

Price of the commodity

Income of the

consumer

Price of related goods

Taste, habit and preference

Season

Occasional events

Population

Advertisement and other

information

Future expectation

Determinants of demand

Law of demand It was propounded by Alfred Marshall.

It shows the relationship between price of commodity and quantity demanded for the commodity by a consumer, other things remaining constant.

It shows the inverse relationship between price and quantity demanded for the commodity.

mathematically , law of demand can be expressed as:

DX =f(PX)

ASSUMPTIONS Income of the consumer should remain

constant. Consumer taste and preference should

remain commodity. Size of the population should remain

constant. Prices of related goods should remain

constant. No expectation of future changes in the

price of the commodity.

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10

20

30

40Demand curve

Quantity

Pric

e

Price Quantities Demand

10 30

20 20

30 10

Law of supply It shows the relationship between price and quantity supplied,

other things remaining the same.

There is direct and positive relationship between price and quantity supplied.

Mathematically, law of supplied ca be expressed as follows: SX=f(PX)

Assumptions No change in price of input or factors of

productions. No change in state of technology. No change in goal of producers. No change in number of producers. No change in price of other goods. No change in tax and subsidy policy of the

government.

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2

4

6

8 Supply curve

Supplied

Pric

e

Price Quantity supplied

2 5

4 10

6 15

Interaction between Demand and Supply (Market Equilibrium) Ricardo and his followers believed that supply slide side

determines the price of product.

But Marshall said that demand and supply determine the equilibrium price and output of the economy.

Equilibrium price is the price at which quantity demanded and supplied are equal.

Price (Rs.)

Quantity Demanded

Quantity Supplied

Pressure On Price

5 16 2

10 11 5

15 9 9 Equilibrium

20 5 11

25 2 16

Thanks!Any questions ?