Meaning of Demand :

Demand for a commodity refers to the quantity of a commodity which a consumer is willing to buy at a given price in a given period of time.

Thus demand involves three essential elements namely : 1. Quantity of a commodity ; 2. Price of the commodity ; 3. The period of time . According to Benhem, The demand for anything at a given price is the amount of it, which will be brought per unit of time at that price.

For instance, statement like a

households demand for milk is two liters at Rs. 17 per lit. is not correct and complete. The meaningful statement would be that at Rs. 17 per lit. a household demand for milk is 2 lit. today because it contains all the three essential elements of demand.

TYPES OF DEMAND
1- Individual and Market Demand ; 2- Industry Demand and Company Demand ; 3- Autonomous Demand and Derived Demand ; 4- Joint Demand and Rival Demand

 Income

Demand : It refers to various

quantities of a commodity demanded by a consumer at various levels of his income, other things being equal. The relationship between the income and the demand for the commodity is generally positive, i.e, when income of consumer rises, demand also rises and when income falls, demand also falls.

DIAGRAM Y

D
y1 INCOME

y
D

Q Q1 DEMAND

PRICE INCOME AND CROSS DEMAND

Price

Demand :

It refers to various quantites of a commodity that an individual household is willing to buy at a given market price in a given period of time. Factors other than the price affecting demand for commodity are presumed to remain unchanged. The relationship between price and the demand for commodity is generally inverse, i.e. when price rises, demand falls and when price falls, demand rises

DIAGRAM Y

D
p PRICE

p1
D

Q1 DEMAND

 Cross

demand :

It refers to various quantities of commodity that a consumer is willing to buy when price of other related commodity changes. In other words, it indicates functional relationship between demand for a particular commodity and the prices of other related commodities such as:
SUBSTITUTE-When the price for one commodity falls the demand for an other commodity, called substitute, also falls.

DIAGRAM Y

D
y1 PRICE OF Y

y
D

Q Q1 DEMAND FOR X

COMPLEMENTARY GOODS : If the fall in price of one commodity, raises the demand for another commodity, the two goods are called complementaries. Car and petrol, pen and ink, tea and milk are some examples of complementary goods.

DIAGRAM Y

D
p PRICE OF Y p1 D

Q Q1 DEMAND FOR X

FREE GOODS : Change in price of one commodity has no effect on the demand of another one are considered as free goods such as clothes and books.

DIAGRAM Y D PRICE

D O X

DEMAND

DETERMINANTS OF DEMAND OR FACTORS AFFECTING DEMAND Price of Commodity, Level of Income, Tastes and Preferences of Consumers, Distribution of Wealth, Government Policy, Size of Population, of related commodities,
Substitute goods. Complementary goods.

The Demand Function

Demand function explains the relationship between the demand for a commodity and the factors determining demand. The above analysis is presented as demand function in the form of the following equation: Dx = f (PX, Pr, Y, T) The equation shows that Demand for commodity X (DX), is the function(f) of Price of commodity X(PX); Price of related goods(Pr); Income of consumer (Y) and tastes of consumer (T).