Demand Function !! Determinants of Demand !! माँग फलन !! मांग के निर्धारक
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2 سال پیش
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Free Notes Download Link - https://t.me/jhansi_institute CHAPTER 5 THEORY OF DEMAND SESSION 2022-23
DEMAND FUNCTION OR DETERMINANTS OF DEMAND
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DEMAND FUNCTION (OR DETERMINANTS OF DEMAND)
Demand function shows the relationship between demand for a commodity and its various determinants.
It shows how demand for a commodity is related to, say, own price of the
commodity or income of the consumer or other determinants.
Corresponding to two aspects of demand, viz., individual demand and market demand, we have two types of demand function:
(i) Individual Demand Function, and
(ii) Market Demand Function.
Individual demand function shows how demand for a commodity, by an individual consumer in the market, is related to its various determinants. It is expressed as under:
Individual Demand Function
Dx = f (Px, Pr, Y, T, E,)
(Here, Dx Quantity demanded of commodity-X; PX Own price of commodity-X; Pr = Price of related goods; Y = Consumer's income; T Consumer's tastes and preferences; E Consumer's expectations.)
(1) Own Price of Commodity: Other things being equal, with a rise in own price of the commodity, its demand contracts, and with a fall in its own price, the demand extends. This inverse relationship between own price of the commodity and its demand is called Law of Demand.
(2) Price of Related Goods – - Substitute Goods: These are the goods which can be substituted for each other, such as tea and coffee, or ball pen and ink-pen.
Complementary Goods: Complementary goods are those goods which complete the demand for each other, and are, therefore, demanded together. Pen and ink, or bread and butter may be cited as examples.
(3) Income of the Consumer: Change in the income of the consumer also influences his demand for different goods. The demand for normal goods tends to increase with increase in income, and vice versa.
Normal Goods :- Normal Goods are those in case of which there is positive relationship between income and quantity demanded. Other things remaining constant, Quantity demanded increases in response to increase in consumer's income and vice versa.
Inferior Goods :- Inferior goods are those in case of which thereis negative relationship between income and quantity demanded. Other things remaining constant quantity demanded decreases in response to increase in consumer's income and vice versa.
(4) Tastes and Preferences: The demand for goods and services also depends on individual’s tastes and preferences. Tastes and preferences of the consumers are influenced by advertisement, change in fashion, climate, new inventions, etc.
(5) Expectations: If the consumer expects a significant change in the availability of the concerned commodity in the near future, he may decide to change his present demand for the commodity. Particularly, if the consumer fears acute shortage of the commodity in the near future, he may raise his present demand for the commodity at its existing price.
Market demand function shows how market demand for a commodity (or total demand for a commodity in the market) is related to its various determinants. Or, it shows the relationship between market demand for a commodity and its various determinants. It is expressed as under:
Market Demand Function
Mkt. Dx = f (Px, Pr, Y, T, E, N, Yd)
1.Population size/Number of buyers
2. Distribution of income.
(1) Population Size/Number of Buyers: Demand increases with increase in
population and decreases with decrease in population. This is because with the increase (or decrease) in population size, the number of buyers of the product tends to increase (or decrease). Composition of population also affects demand.
(2) Distribution of Income: Market demand is also influenced by change in the distribution of income in the society. If income is equitably distributed, there will be more demand. If income is not equitably distributed, there will be less demand.
#demandfunction
#demand_function
#determinantsofdemand
#determinants_of_demand
#determinantsclass12th 1
DEMAND FUNCTION OR DETERMINANTS OF DEMAND
Social Accounts for Regular Updates –
Instagram - Instagram: raikwar.pankaj99
Facebook - Facebook: jhansiinstitute
Twitter - Twitter: jhansi_institut
Telegram - https://t.me/pankajraikwar
DEMAND FUNCTION (OR DETERMINANTS OF DEMAND)
Demand function shows the relationship between demand for a commodity and its various determinants.
It shows how demand for a commodity is related to, say, own price of the
commodity or income of the consumer or other determinants.
Corresponding to two aspects of demand, viz., individual demand and market demand, we have two types of demand function:
(i) Individual Demand Function, and
(ii) Market Demand Function.
Individual demand function shows how demand for a commodity, by an individual consumer in the market, is related to its various determinants. It is expressed as under:
Individual Demand Function
Dx = f (Px, Pr, Y, T, E,)
(Here, Dx Quantity demanded of commodity-X; PX Own price of commodity-X; Pr = Price of related goods; Y = Consumer's income; T Consumer's tastes and preferences; E Consumer's expectations.)
(1) Own Price of Commodity: Other things being equal, with a rise in own price of the commodity, its demand contracts, and with a fall in its own price, the demand extends. This inverse relationship between own price of the commodity and its demand is called Law of Demand.
(2) Price of Related Goods – - Substitute Goods: These are the goods which can be substituted for each other, such as tea and coffee, or ball pen and ink-pen.
Complementary Goods: Complementary goods are those goods which complete the demand for each other, and are, therefore, demanded together. Pen and ink, or bread and butter may be cited as examples.
(3) Income of the Consumer: Change in the income of the consumer also influences his demand for different goods. The demand for normal goods tends to increase with increase in income, and vice versa.
Normal Goods :- Normal Goods are those in case of which there is positive relationship between income and quantity demanded. Other things remaining constant, Quantity demanded increases in response to increase in consumer's income and vice versa.
Inferior Goods :- Inferior goods are those in case of which thereis negative relationship between income and quantity demanded. Other things remaining constant quantity demanded decreases in response to increase in consumer's income and vice versa.
(4) Tastes and Preferences: The demand for goods and services also depends on individual’s tastes and preferences. Tastes and preferences of the consumers are influenced by advertisement, change in fashion, climate, new inventions, etc.
(5) Expectations: If the consumer expects a significant change in the availability of the concerned commodity in the near future, he may decide to change his present demand for the commodity. Particularly, if the consumer fears acute shortage of the commodity in the near future, he may raise his present demand for the commodity at its existing price.
Market demand function shows how market demand for a commodity (or total demand for a commodity in the market) is related to its various determinants. Or, it shows the relationship between market demand for a commodity and its various determinants. It is expressed as under:
Market Demand Function
Mkt. Dx = f (Px, Pr, Y, T, E, N, Yd)
1.Population size/Number of buyers
2. Distribution of income.
(1) Population Size/Number of Buyers: Demand increases with increase in
population and decreases with decrease in population. This is because with the increase (or decrease) in population size, the number of buyers of the product tends to increase (or decrease). Composition of population also affects demand.
(2) Distribution of Income: Market demand is also influenced by change in the distribution of income in the society. If income is equitably distributed, there will be more demand. If income is not equitably distributed, there will be less demand.
#demandfunction
#demand_function
#determinantsofdemand
#determinants_of_demand
#determinantsclass12th 1
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