DEMAND And SUPPLY and Income elasticity of DEMAND

Of GARMENT INDUSTRIES IN INDIA

Vaibhav yadav11llb064section -B

INDEX

What is demand What is supply What is equilibrium Exception of demand and supply Income Elasticity of

demand Garment industries in India

Demand

Demand curve

LAW OF DEMAND Whenever the price decrease demand increases.

NON PRICE DETERMINENT OF DEMANDTaste and preferences, Income,No. of buyers, Future expectation,Price of related good

Garment Industries follow the law of demand and demand increases on seasonal clothes.

DEMANDQuantity of goods and services that people are ready to buy at various prices within same period of time.

SUPPLY Quantity of goods and services that people are ready to sell at various prices within same period of time

Supply curve

SUPPLY CURVE

Law of supplywhenever the price decreases supply increases.

NON PRICE DETERMINENT OF SUPPLYCost and technology, income of customer, rise of substitute goods or price of complimentary goods, future expectations, no. of sellers, whether conditions

Garment supply increases at the starting new season .

SUPPLY

EQUILIBRIUM

Equilibrium curve

The price that equate the quantity demanded within the quantity suppliedORIt also defines as the price which clear the condition of either surplus or shortage.

IN EQUILIBRIUM the garment industry is in a state in which supply and demand is on constant level.

Exceptionto the law of demand and supply

Giffen goods Giffen good is one which

people paradoxically consume more of as the price rises, violating the law of demand. In normal situations, as the price of a good rises, the substitution effect causes consumers to purchase less of it and more of substitute goods. In the Giffen good situation the income effect dominates, leading people to buy more of the good, even as its price rises.

Veblen goods Veblen goods are a group of 

commodities for which people's preference for buying them increases as their price increases, as greater price confers greater status, instead of decreasing according to the law of demand. A Veblen good is often also a positional good.

 

 Income elasticity of demand

Income elasticity of demand measures the relationship between a change in quantity demanded for good X and a change in real income.

The formula for calculating income elasticity: % change in demand divided by the % change in income

Garment industry follow the income elasticity of demand –people prefer to buy garments according to their income.

Normal and inferior goods

NORMAL GOODS Demand increase with

increase in income

INFERIOR GOODS Demand decrease with

decrease in income

ACCORDIND TO THE CONCEPT OF DEMAND AND INCOME -THE GOODS ARE DIVIDED INTO

Generally garments fall in the category of normal goods

Some of the leading Garment industries of India

Flying machine Cantabil Numer Uno Marks and Spencer KOUTONS LEVIS STRATUS

All these garment industries follow the law of demand and supply

and follow the income elasticity of demand. Garment industries generally use the concept of SALE to increase

the sales of the garments.

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