DAY 1 – 2 periods

ANALYZE THE PICTURE

DEMAND
LEARNING OBJECTIVES
—he students will be able to
T
state the meaning of demand.

—he students will be able to

T
state and derive the law of
The studentsdemand
will be able
withto create and
a diagram.
draw individual dd curve.

—he students will be able to

T
create and draw the market
demand curve through a market
simulation .
What Is Demand ?
• Demand = Desire + Purchasing power
+willingness to spend .
• Demand for a commodity always depends
upon price.(inverse relationship)
• Demand refers to different possible quantities
to be purchased at different possible prices.
• Quantity demanded refers to a specific qty at
a specific price.
• What do you think is quantity demanded ?

• Clue: look at the picture and guess.

 DEFINITION

• Demand may be defined as the quantity of goods consumers are willing to

buy at a particular price at a point of time.
• Demand can be of two types –
Individual demand and market demand.
• Demand function can be written as
D = f(Px, Pr,Y,T)
• LOOK AT THE TWO PICTURES GIVEN AND IDENTIFY THE TYPE OF
DEMAND
2Kg 1Kg
4KG
Individual Demand
 INDIVIDUAL DEMAND
• It refers to the quantity of a commodity which
an individual consumer is willing to buy at a
given price and in a given period of time.

PLOT THE GRAPH

PRICE QUANTITY
AND ANALYZE THE DEMANDED
RELATIONSHIP
BETWEEN THE 50 1
TWO VARIABLES.
40 2
30 3
20 4
10 5
 INDIVIDUAL DEMAND SCHEDULE

• Individual Demand Schedule: Price of Ice Qty

It is a table showing different cream (Rs) Demanded
quantities of a commodity 1 4
that one particular buyer in
the market is willing to buy 2 3
at different prices at a
particular point of time. 3 2

4 1
• INDIVIDUAL DEMAND CURVE
 INDIVIDUAL
DEMAND
CURVE
• It is a curve representing individual demand
schedule- different quantities bought at the various
prices at a point of time.

D
The demand curve
Price(Rs) slopes downward. It
shows the inverse
D relationship between
price and quantity
Qty demanded.
 MARKET DEMAD = HORIZONTAL
SUMMATION OF INDIVIDUAL DEMANDS

2Kg 1Kg
4KG
MARKET
DEMAND = 2 + 1
+ 4 = 7 Kg
 MARKET DEMAND
• It is the sum total of the quantities of a commodity
demanded by all the consumers in a market at a given price
and in a given period of time.
PRICE QUANTIT QUANTIT QUANTIT MARKET
Y Y Y DEMAND
DEMANDE DEMANDE DEMANDE
D BY A D BY D BY
B C
10 5 4 3 12
8 8 6 5 19
6 12 10 8 30
2 15 12 10 37
 MARKET DEMAND

Market demand refers to the

sum of all individual demands
for a particular good or
service.
 MARKET DEMAND SCHEDULE
Price of Mohan’s Sohan’s Market
the Milk Deman Demand Demand
d
in
(1) (2) (3) (4)
5 1 4 5

4 2 6 8

3 3 8 11
PLOT THE GRAPH
2 4 10 14
AND ANALYZE THE
RELATIONSHIP
BETWEEN THE
TWO VARIABLES.
MARKET DEMAND CURVE
Y

D
P D D
R
I
C
E

D
D
D

X
0
QUANTITY
 MARKET
DEMAND CURVE
• It is a horizontal summation of individual demand
curves.
• It shows various quantities of a commodity which
all the buyers in the market are willing to buy at a
particular price at a point of time.
• Is drawn with the help of market demand
schedule, showing total demand for a good at
diffferent prices by all the consumers in the
market.
 MARKET DEMAND V.
INDIVIDUAL DEMAND
• Market demand refers to the sum of
all individual demands for a particular
good or service.
• Graphically, individual demand curves
are summed horizontally to obtain the
market demand curve.
1. Differentiate between Individual
and market demand curve using a
schedule and diagram.
DAY 2 - 2 periods
LEARNING OBJECTIVES
Factors affecting quantity demanded

Price of related goods

Future price expectation

Others: income, taste

Price of the good

Qd
THE LAW OF DEMAND

• Within a period of time, an increase

(decrease) in price of a good results
in a decrease (increase) in its quantity
demanded, ceteris paribus.
THE DEMAND CURVE: THE RELATIONSHIP
BETWEEN PRICE AND QUANTITY DEMANDED

• Demand Schedule
– The demand schedule is a table that shows the
relationship between the price of the good
and the quantity demanded.
DEMAND SCHEDULE
PRICE(Rs) QUANTITY
DEMANDED
(Units)
Ice -creams

5 10
4 20
3 30
2 40
1 50
 The Law of Demand

Price

A
P1

B
P2

Quantity
Q1 Q2
 The Law of Demand

Price

C
P1

P2

Quantity
Q1 Q2
Ceteris paribus
Price of related goods
Other
Future factors
price being constant
expectation
Others: income, taste

Price of the good

Qd
 The Law of Demand
Price of the good

Qd

Ceteris paribus
1. Explain the Law of Demand . 4mks
Day 3 – 2 periods
LEARNING OBJECTIVES
• The students will be
able to :
• State the
determinants of
demand.
• To analyze and
explain the effect of
each determinants
on the demand
curve.
 DETERMINANTS OF DEMAND
• Demand function can be written as
D = f(Px,Pr,Y,T)
1. Price of the Commodity:
(Law of Demand) States that other factors affecting
demand remaining constant, quantity demanded of
a commodity increases with fall in its price and
decreases with rise in its price. (inverse
relationship)
• Same schedule& diagram used in individual demand
can be used.
WHY IS THE DEMAND CURVE
DOWNWARD SLOPING?

• Law of diminishing marginal utility

• Income effect
• Substitution effect.
• Size of consumer group
• Different Uses.
 2.INCOME OF THE CONSUMER

• Normal goods;
When income increases the demand for normal
goods increases and vice versa.It has a positive
income effect. Eg; any good
• Inferior goods:
When income increases the demand for inferior
goods decreases. Income effect is negative. Eg: people
prefer better grains for coarse grains, branded for
non-branded, taxi to public transport etc.
GUESS BASED ON CLUES.
NORMAL GOODS Vs INFERIOR GOODS
NORMAL GOODS ARE INCOME POSITIVE
• NEGATIVE
INFERIOR GOODS ARE INCOME
RELATED GOODS
 3.PRICE OF RELATED GOODS- CROSS
PRICE EFFECT
Related goods are of two
types.
1.Substitutes- These are
goods which can be
substituted for each
other. Eg tea and
coffee, butter and
margarine etc.
Increase in the price of
one will cause an
increase in demand for
the other and vice
versa.
2.COMPLEMENTARY GOODS.

• Those goods which are

demanded together. Eg:
car and petrol, pen and
ink, tea and sugar, DVD
and DVD players etc.
• Increase in price of one
lead to decrease in the
demand for the other and
vice versa.
ANALYZE
THE
DIAGRAM
 4.TASTE AND PREFERENCES

• Favourable changes in
taste and preferences
leads to increase in
demand and vice versa.
• Tastes and preferences
are influenced by
advertisements, change
in fashion, climate
,innovations etc.
5.EXPECTATIONS ABOUT
FUTURE.
• If the consumer expects prices to rise in
future, he will buy more quantity in the
present.
• If the consumer expects prices to fall in the
future, he will buy less quantity in the
present.
ANALYZE THE PICTURE AND DRAW THE
DIAGRAM
TRY OUT.........

1. If the demand for CNG increases as price of petrol

increases how are the two goods related?
2. If demand for X increases as the household income
increases what kind of good is X?
3. Why do households buy more of a good at a lower
price?
1. If demand for good Y increases
as price of good X increases,
how are the two goods related?
2. ‘For a family of four, the demand
schedule for rice should be the
same for each member’. Discuss.
DAY 4- 2 periods
 RECALL

• What is the law of demand?

• What is the change in quantity demanded?
• What is the change in demand?
 LEARNING OBJECTIVES
• The students will be able to :
• Differentiate between Change in demand
and change in quantity demanded.
• Analyze the situations and explain the
effect on demand curve.
Is change in Qd the same
as change in demand?
 CHANGE IN QUANTITY
DEMANDED

• Caused by a change in a good’s price

• Holding all other factors constant
• A movement along the same demand
curve
CONTRACTION OF DEMAND
PRICE (Rs) QUANTITY DEMANDED

1 50
2 40
3 30
4 20
5 10
DRAW THE DIAGRAM
 CONTRACTION OF
DEMAND
Price

A
P1

B
P2

Quantity
Q1 Q2
CHANGE IN QUANTITY
DEMANDED
• CONTRACTION OF DEMAND:
Other things remaining constant , due to Rise in the price of the
commodity ,the quantity demanded falls.
Also known as UPWARD MOVEMENT OF DEMAND CURVE.
It can be explain with the help of following schedule and diagram:
EXPANSION OF DEMAND
PRICE (Rs) Quantity
Demanded(Uni
ts)
5 10
4 20
3 30
2 40
1 50
 EXPANSION OF DEMAND

Price

P1

P2

Quantity
Q1 Q2
CHANGE IN QUANTITY
DEMANDED
• EXPANSION OF DEMAND:
Other things remaining constant, due to fall in
the price of the commodity.
Also Known as Downward movement of
demand curve.
It can be explain with the help of following
schedule and diagram:
CHANGE IN DEMAND OR SHIFT
IN DEMAND
• Caused by a change in factors (e.g. income, taste etc) other than a
good’s own price
• A shift of the entire demand curve
• Two types
• INCREASE IN DEMAND
• DECREASE IN DEMAND
CHANGE IN DEMAND

• Increase in demand:
• Own Price of the good remaining constant , When demand of a good
increases due to other factors.
• Also known as RIFHTWARD SHIFT IN DEMAND CURVE.
• Causes of increases in demand:
1. Price of substitute good increases.
2. Price of complementary good falls.
3. Income of the consumer rises in case of normal goods.
4. Income of consumer falls in case of inferior goods.
5. Favorable change in taste and preferences.
6. Future expectation to rise in price
INCREASE IN DEMAND

PRIC QUANTITY
E DEMANDED(
(RS) UNITS)
5 10
5 20
5 30
5 40
5 50
CHANGE IN QUANTITY
DEMANDED
• DECREASE IN DEMAND:
• Own Price of the good remaining constant , When demand of a good
decreases due to other factors.
• Also known as LEFTWARD SHIFT IN DEMAND CURVE.
• Causes of decrease in demand:
1. Price of substitute good decrease.
2. Price of complementary good rises.
3. Income of the consumer falls in case of normal goods.
4. Income of consumer rises in case of inferior goods.
5. Unfavorable change in taste and preferences.
6. Future expectation to fall in price
 DECREASE IN DEMAND
PR QUANTITY
IC
E
5 50
5 40
5 30
5 20
5 10
FACTORS CAUSING SHIFTS
IN DEMAND
DRAW A CONCEPT MAP –
DIFFERENTIATE BETWEEN
CHANGE IN DEMAND
/QUANTITY DEMANDED
 CHANGE IN QTY DEMANDED AND
CHANGE IN DEMAND
• Change in Quantity demanded

Movements along the demand curve

Contraction of
Extension of
Demand
demand

Caused by decrease Caused by increase

in own price in own price
CHANGE IN DEMAND

Shifts in the demand curve

Decrease in demand Increase in demand

Caused by factors other than

change in the price of the
commodity
1. Differentiate between increase
and expansion of demand.
2. Differentiate between decrease
and contraction of demand