Definition of Demand Meaning of Demand, in ordinary language the word demand means desire. But in economics demand means desire backed up by enough money to pay for the good desired.
Every desire cannot be called demand. There is a also functional relationship between price and demand. The second point is that demand is always per unit of time.
Definition of Demand
The second thing is the same, with every decrease in price the quantity is demanded to increase, and with every increase in price the quantity of the thing is demanded to decrease, The law of demand states that there is an inverse relationship between price and demand.
In simple language, we can say that when the price of any commodity falls, people are tempted to purchase more commodities.
On the other hand when the price of any commodity rises people demand less quantity.
Note no doubt with the full in price demand increases but it is not necessary that demand may also increase according to the same ratio.
The formal relationship between demand and price, as required by law, can also be expressed in this way:-
Qd= quantity demand
P = Price
Definition of Demand Meaning of Demand
The demand schedule of an individual for sugar which is purchased in the market at different prices per unit of time is given:
Prices per kg in rupees Quantity demanded per year
The above schedule shows that a consumer buys 100kg. sugar at 10 rupees per kg. when the price falls to two rupees his demand increases up to 500kg. we can say that other things remaining the same, a consumer buys more goods at a lower price and less goods at higher prices.
Demand Curve Demand is the graphic representation of the demand schedule.
In the demand curve, the price is shown on “OY” axis and quantity demand is platted on “OX” axis. The curve DD’ demand curve slopes that price and quantity work in the opposite direction.
The demand curve always moves from left to right and downward. Because with the fall in price demand increase.
While explaining the law we have stated that other things remaining the same, these factors are following.
a) Change in income
There should be no change in income. Otherwise, a rise in price will not cause a reduction in the quantity demanded.
b) Change in Fashion
As a fashion of any commodity changes its demand and price both fall. Therefore, the law of demand does not work in this case.
c) Change in Weather
Sometimes due to a sudden change of weather, then this law cannot operate.
d) Change in Tastes
Changes in the taste of any desired item can also increase or decrease the demand. For example, people develop a taste for milk. The demand for tea will decrease.
e) Change in Population
If the population of the country increases, then this law will not operate.
f) Precious and Cheap Goods
Cheapest and costly goods demand remains constant. For example, salt and diamond demand cannot change due to a change in price.
g) Invention of Substitutes
If the cheap and better substitutes of any commodity are invented. Then the demand for that commodity cannot rise with the fall of price.
h) Change in Distribution of Wealth
If any equal distribution of wealth is brought wheat in a country, then demand for expensive goods will decrease and basic necessities will increase. So then this law not operate.
i) Change in the State of Trade
The total quantity of goods required is also affected by circulating fluctuations. Therefore, this law cannot work in these circumstances.
j) Future Expectations
Sometimes, If people expect that the price of a particular item will increase in the near future. So they increase their purchase with the rise in price.
k) Devaluation Expectations
If the people are expected that currency will be devalued in the near future, then this law will not operate.
Sometimes the demand line may go from top to bottom. In other words, it may have a positive tilt line. For example, if people expect the prices to go up in the near future, they will purchase more commodities at higher prices. Similarly, some articles have greater demand when their price rises and lesser demand when the price falls. Sometimes people may purchase more goods at higher prices due to ignorance.