Demand Theory

Published On : 2020-10-07

DEMAND THEORY

Demand:  Demand is defined as the quantity of a good or service that consumers are willing and able to buy at a given price in a given time period.

There is a difference between demand and quantity demanded i.e. demand refers to the whole demand schedule that consumer draws in mind showing different quantities of a commodity that a consumer intends to buy at different given prices, whereas quantity demanded refers to the particular quantity out of the demand schedule which was intended by consumer at a specific given price.

Types of Demand: Demand can be classified as
Individual Demand: It refers to the demand of a single consumer.
Market Demand: It refers to demand of all the consumers.

Demand Schedule:    It is table that shows different prices of a good in quantity of the same good demanded at each given price. It has two aspects: individual demand schedule and market demand schedule

Individual Demand Schedule:  It is defined as a table that shows quantities of a commodity that an individual consumer is able and willing to buy at given prices of the same commodity.

Price

Quantity Demanded

100

10

200

8

300

6

400

4


Market demand Schedule: It shows the aggregate demand of all consumers at different prices at given time.

Price

Demand of A

Demand of B

Market Demand

100

10

15

10+15=25

200

8

12

8+12=20

300

6

10

6+10=16

400

4

8

8+4=12


Demand Curve: It is the graphical representation of demand schedule. Like schedule it also has two aspects: Individual demand curve and Market demand curve.

Individual demand curve: it is a curve that shows different quantities of a commodity that an individual consumer is able and willing to buy at given prices of the same commodity. 


Market demand curve: It is a curve that shows the aggregate demand of all consumers at different prices at given time. It can be referred as the horizontal summation of individual demand curves






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