1. Demand and Demand Function

2. What is Individual Demand? Demand by a single consumer What consumer purchases at a given price in a given period of time. Backed by Purchasing Power

3. What are the Factors of Demand? Price of a Commodity Tastes and Preferences Income of the Consumer Prices of Related Goods (Substitutes and Complements)

4. What is Utility? Satisfaction a consumer derives. Demand = F (Utility) Higher the utility, higher will be the demand

5. What is Quantity Demanded? Quantities of a commodity which the consumers buy at a particular price It is a flow concept Quantity demanded>Quantity available for sale Quantity demanded = F(Price) Other determinants are assumed to be constant Higher the price, lower will be the quantity demanded. Q = a-bP

6. What is a Demand Schedule? According to Samuelson, The Table relating to price and quantity demanded is called the demand schedule.

7. What are the types of Demand Schedule? Individual Demand Schedule : Quantity of a given commodity which a consumer will buy at all possible prices, at a given moment. Market Demand Schedule: refers to different quantities of a commodity that all consumers in the market are ready to buy at different possible prices of the commodity at a point of time.

8. What is the Demand Curve? Graphic presentation of demand schedule. The demand curve represents to maximum quantities per unit of time that consumers will take at various prices- Leftwitch

9. How the Demand Curve Looks like? Individual Demand Curve: Represents different quantities of commodity demanded by a consumer at different prices. Market Demand curve: Horizontal summation of individual demand curves.

10. What is the Law of Demand? Other things being equal, if the price of the commodity falls, the quantity demanded of it will increase and vice-versa. Inverse relationship between price and quantity demanded.

11. What are the Assumptions of the Law of Demand? Tastes and Preferences of a consumer are constant. No change in the income of the consumer Prices of related goods do not change No future expectations of price.

12. Why is the demand curve sloping downwards? Law of Diminishing Marginal Utility Income effect (positive or negative) Substitution effect Size of the consumer group Different uses of a commodity

13. What is the exception to the Law of Demand? Analyzed by Sir Robert Giffen. Reflects increase in demand with the increase in price.

14. What are the causes of Upward sloping Demand Curve? Articles of Distinction Ignorance Giffen goods

15. What is Market Demand? Sum of individual demands The factors of market demand are: Own price of a commodity Income of the individuals Prices of related commodities Advertising expenditure Number of consumers or population

16. How does the Market Demand Curve looks like?

17. What is the Relationship between Demand Function and Demand Curve? Demand Function: Relationship between quantity and various independent variables Demand curve: Relationship between Quantity and price.

18. What is a Bandwagon Effect? Individuals demand depends on others demand Commodity is in Fashion

19. What is a Snob Effect? Demand depends on the Prestige value of a commodity. Exclusive Demand curve is steeper (Inelastic)

20. What is Change in Demand? Caused by factors other than price. Causes a shift in the Demand curve May be either increase in demand or decrease in demand

21. In what direction does the shift occur?

22. What are the Causes of Increase in Demand? Increase in Income of the Consumer Increase in Price of Substitute goods Decrease in Price of Complementary goods Favorable change in tastes Expected increase in future prices Increase in number of consumers Expected increase in future income

23. What are the Causes of Decrease in Demand? Decrease in Income of the Consumer Decrease in Price of Substitute goods Increase in Price of Complementary goods Un-Favorable change in tastes Expected decrease in future prices Decrease in number of consumers Expected decrease in future income

24. What is the demand for Durable goods? Durable goods give services for a long period of time. Can be stored for long term Have volatile demand

25. What are the features of Durable goods? Large inventories are stored by producers, distributors and consumers Replacement of Durable goods can be deferred.

26. What is the difference between Durable goods and Non- durable goods? Durable Goods Purchased for getting services in future periods. Fluctuations in demand is greater. Non-Durable Goods Purchased for current consumption only. Fluctuations in demand is less.

27. What is Derived Demand? Not demanded to satisfy the wants directly. Are used to produce the consumer goods.

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