What is Demand and Analysis?

What is Demand and Analysis ?

Demand is a term used to describe a person's desire for something. But demand is more than this in economics. Demand in economics, in the words of Stonier and Hague, "means demand backed up by adequate money to pay for the commodities sought." This indicates that a demand is only effective if it is supported by purchasing power. In addition, a commodity must be willingly purchased. Therefore, in economics, demand refers to a desire that is supported by a willingness and the ability to pay for a good. according to Benham. The quantity of something at a certain price that will be purchased in a given amount of time at that price is its demand. Therefore, demand is the quantity of a good that a specific client is willing to buy at a specific price within a specific time frame. When all three of the following conditions are met, the demand is said to exist.

  • 1. A desire to buy
  • 2. Financial capacity
  • 3. A readiness to pay

Ex: A pauper could want to purchase a vehicle but is unable to afford it.

Ex: A greedy person can pay money for a car but does not buy one.

Demand Function

A function called the demand function explains the relationship between a single variable and its determinants. The relationship between the quantity of a good that customers demand over the course of a particular period and the variables that affect the demand is known as the demand function. All the factors are independent variables, and the quantity requested is the dependent variable. A demand function can be created using the factors.

Law of Demand

The law of demand demonstrates the connection between a commodity's price and the quantity that is sought after in the market. Marshall stated that "the amount demand increases with a decrease in price and decreases with an increase in price." According to the law of demand, "all things being equal, the price of the commodity, the higher the price, the lower is the demand and the lower the price, the higher is the demand." Ceteris paribus is the term for it (Latin phrase meaning other things constant.) The following demand schedule can be used to explain the law of demand.

Law of demand is based on the following assumptions:

  • 1. Consumer tastes and preferences have not changed.
  • 2. The income should not change.
  • 3. Other products' prices shouldn't alter.
  • 4. The good or service should not be substituted for.
  • 5. The item shouldn't grant any distinctions.
  • 6. The commodity should be in constant demand
  • 7. People shouldn't anticipate a change in the commodity's price.
Law of Demand Exceptions
When all other factors remain the same, the law of demand states that when a commodity's price rises, demand declines and vice versa. However, this is not always the case. Sometimes, when a commodity's price rises, so does its demand; conversely, as a commodity's price falls, so does its demand. All of these situations are thought to be exceptions to the demand law.

Demand of Determinants 
The market and individual demand for a product are influenced by a number of variables or drivers. These include political, social, and economic considerations. Demand Function refers to how each factor affects how much of a commodity is requested. These elements are listed below.

  • Consumers' Salary
  • Price cost of related products
  • Preferences and routines of consumers
  • The commodity's price
  • Income
  • State of the Economy Government Policy
  • Preferences and routines of the consumer
Demand of Elasticity 
The relationship between a change in price and subsequent change in the amount sought is explained by the elastic nature of demand. Marshall established the idea of demand elasticity. Demand elasticity depicts how much the amount demanded changes in response to a change in price. According to Marshall's definition of elasticity of demand, it refers to how much or how little the amount demanded changes for a given decrease in price and how much or how little it changes for a given increase in price. Elastic demand: A slight change in price may cause a significant shift in the amount demanded. Demand is elastic in this situation. Demand is said to be inelastic if there is a large change in price followed by a minor change in demand.



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