Skip to main content

law of demand & types of demand- economics

 LAW OF DEMAND:

Law of demand introduced by Professor Alfred Marshall in his book “Principles of Economics” in 1890. A person willingness to purchase and capacity to pay for the commodity is called demand. In other words, the demand for anything at a given price is the amount of it which will be bought per unit of time at that price. Demand is a effective desire of an individual but all desires are not demand.

If a person has income but no willingness to purchase a commodity then there is no demand. On the other hand, if a person has willingness to purchase a commodity but he has income or no income then there is demand. That’s why demand is an effective desire. 

The demand of commodities is divided into 2 categories-

  • Individual demand- when a single consumer or a household demand for commodities at a particular time at a given price.


  • Market demand- the sum of total demand by all the household or consumers at a particular time at a given price.

The relation between Price & Demand is inversely proportion. As the price of a commodity increases, the demand of the same commodity decreases or vice versa. When price of a commodity increases, consumers are forced to purchase less quantity of a commodity at a certain price in the contrary if the price of a commodity decreases, consumers are able to purchase more quantity at the same amount of money. 


TYPES OF DEMAND:

There are 5 types of demand which are abbreviated as “DDJCC”. The type of demand are as follow:

  1. DIRECT DEMAND:

When a commodity is directly purchase from the market & serve to the consumer for direct consumption. For example demand for clothes, sugar, T.V., etc. 


  1. DERIVED DEMAND:

When required goods that are not directly available in the market for purchase by the consumer & need to create demand. For example demand for labour, land, capital & entrepreneur are not readily available to purchase.


  1. JOINT OR COMPLEMENTARY DEMAND:

When demand for one commodity increase due to increase in demand for another commodity. For example cars & fuel, bulb & electricity, etc. if the demand for cars increases as a result demand for fuel also increases.


  1. COMPOSITE DEMAND:

When demand for a commodity increases or decrease which is used for several purposes. For example demand for electricity, matchbox, fuel, etc. 


  1. COMPETATIVE DEMAND:

When the price of commodity increases and  demand for substitute goods increases in order to satisfy the needs of consumer. For example when price of Dolo tablet increases the demand of Paracetamol increases as a substitute good. 


The demand of a commodity is determined by certain factors. These factors are as follows:

  1. Price: 

The demand of a commodity changes with change in price of that commodity. If the price of a commodity increases, the demand of that commodity decreases. The relation between the price & the demand of a commodity is inversely proportional to each other. 


  1. Income:

The income of a consumer determine the purchasing power of a customer. Income of a customer is directly proportional to the demand of a commodity. If a person has more money, person demand for more quantity of commodities. 


  1. Price of Substitute goods: 

When the price of a commodity increases, the demand for substitute goods increases. Substitute goods are less costly than the original goods. Consumer prefer to buy cheaper goods over expensive goods. 


  1. Price of Complementary goods:

When the price of one commodity effects the demand of other commodity. The price of fuel increases the demand for cars will decreases. On the other hand if the price of cars decreases, demand for fuel will increases.


  1. Nature of Products:

Those commodities which are necessary for consumers will always keep in high demand irrespective of its price. Some of the necessary goods are medicines, food, clothes, etc. some goods are necessary for survival and some are addictive goods to which consumers are addicted. Some of the addictive goods are cigarette, drugs, weed, etc. 


  1. Size of population:

The demand of commodities depend upon the population of a particular area. Larger the population, greater will be the demand for commodities. Population of a certain area is directly proportional to demand. 


  1. Prediction of future price:

There is a concept of prediction of price in the economy. When the price is low, purchase more. On the contrary when price is high, purchase less. In the prediction of future price consumers are predicting price of commodities that in future time its price will decrease, so we purchase when price fall down. On the contrary price of a commodity will increase, so we purchase it today.


Law of demand deal with the functional relationship between price & quantity of product demanded by a consumer. The law of demand based on certain assumptions that there is no change in population, prices of commodities are same, quality of commodities are same, there is no changes in taxes, no change in geographical condition, etc. 
Labels:

Comments

Post a Comment

Popular posts from this blog

Section 58B of The Advocates Act - Special provision relating to certain disciplinary proceedings

 Section 58B The Advocates Act Description (1) As from the 1st day of September, 1963, every proceeding in respect of any disciplinary matter in relation to an existing advocate of a High Court shall, save as provided in the first proviso to sub-section (2), be disposed of by the State Bar Council in relation to that High Court, as if the existing advocate had been enrolled as an advocate on its roll. (2) If immediately before the said date, there is any proceeding in respect of any disciplinary matter in relation to an existing advocate pending before any High Court under the Indian Bar Councils Act, 1926 (38 of 1926), such proceeding shall stand transferred to the State Bar Council in relation to that High Court, as if it were a proceeding pending before the corresponding Bar Council under clause (c) of sub-section (1) of section 56: Provided that where in respect of any such proceeding the High Court has received the finding of a Tribunal constituted under section 11 of the Indian B
Post a Comment
Read more

Case Laws related to Defamation in favour of ClaimantCase Laws related to Defamation in favour of Claimant. TOLLEY Vs, J.S FRY & SONS LTD – (1931) Facts The defendants were owners of chocolate manufacturing company. They advertised their products with a caricature of the claimant, who was a prominent amateur golfer, showing him with the defendants’ chocolate in his pocket while playing golf. The advertisement compared the excellence of the chocolate to the excellence of the claimant’s drive. The claimant did not consent to or knew about the advertisement. Issue The claimant alleged that the advertisement suggested that he agreed to his portrait being used for commercial purposes and for financial gain. He further claimed that the use of his image made him look like someone who prostituted his reputation for advertising purposes and was thus unworthy of his status. At trial, several golfers gave evidence to the effect that if an amateur sold himself for advertisement, he no longer maintained his amateur status and might be asked to resign from his respective club. Furthermore, there was evidence that the possible adverse effects of the caricature on the claimant’s reputation were brought to the defendants’ attention. The trial judge found that the caricature could have a defamatory meaning. The jury then found in favor of the claimant. Held The House of Lords held that in the circumstances of this case – as explained by the facts – the caricature was capable of constituting defamation. In other words, the publication could have the meaning alleged by the claimant. The Lords also ordered a new trial limited to the assessment of damages. NEWSTEAD V LANDON EXPRESS NEWSPAPER LTD, (1939) Facts: A newspaper published a defamatory article about Harold Newstead. However, another person with this name brought an action in libel. He claimed that the article had been misunderstood as leading to him. The defendant newspaper recognised that they published the article. Also, they denied that they had the intention of being defamatory of him. Consequently, the claimant argued that the newspaper was under a duty. The duty was to give a clear and complete description of the correct person. Moreover, the claimant argued that the defendants were in breach of the duty. Issues: The issue in Newstead v London Express Newspaper, was if the reasonable persons would have understood the words complained of to refer to the plaintiff. Held: The Court of Appeal stated that in accordance with the current law on libel, liability for libel does not depend on the intention of the defamer; but on the fact of the defamation. Accordingly, a reasonable man, in this case a newspaper publisher, must be aware of the possibility of individuals with the same name and must assume that the words published will be read by a reasonable man with reasonable care.

  Case Laws related to Defamation in favour of Claimant.  TOLLEY  Vs,  J.S FRY & SONS LTD – (1931) Facts The defendants were owners of chocolate manufacturing company. They advertised their products with a caricature of the claimant, who was a prominent amateur golfer, showing him with the defendants’ chocolate in his pocket while playing golf. The advertisement compared the excellence of the chocolate to the excellence of the claimant’s drive. The claimant did not consent to or knew about the advertisement.   Issue The claimant alleged that the advertisement suggested that he agreed to his portrait being used for commercial purposes and for financial gain. He further claimed that the use of his image made him look like someone who prostituted his reputation for advertising purposes and was thus unworthy of his status. At trial, several golfers gave evidence to the effect that if an amateur sold himself for advertisement, he no longer maintained his amateur status and might be aske
1 comment
Read more

Rules as to delivery of goods

                             Rules as to delivery of goods Section 2(2) of Sale of Goods Act defines ‘delivery’ as a ‘voluntary transfer of possession from one person to another.’ Thus, if the transfer of goods is not voluntary and is taken by theft, by fraud, or by force, then there is no ‘delivery. Moreover, the ‘delivery’ should have the effect of putting the goods in possession of the buyer. The essence of the delivery is a voluntary transfer of possession of goods from one person to another. There is no delivery of goods where they are obtained at pistol point or theft. 1. Mode of Delivery: According to Section 33, delivery of goods sold may be made by doing anything which the parties agree shall be treated as delivery or which has the effect of putting the goods in the possession of the buyer or of any person authorized to hold them on his behalf. Delivery of goods may be actual, symbolic or constructive. 2. Expenses of Delivery: According to Section 36(5), unless otherwise agree
Post a Comment
Read more