Managerial Economics Page 1
, MODULE - II
DEMAND CONCEPTS
Meaning of Demand
Demand is a common parlance means desire for an object. But in economics demand is
something more than this. In economics ‘Demand’ means the quantity of goods and services
which a person can purchase with a requisite amount of money.
According to Prof.Hidbon, “Demand means the various quantities of goods that would be
purchased per time period at different prices in a given market. Thus demand for a commodity
is its quantity which consumer is able and willing to buy at various prices during a given period
of time. Simply, demand is the behavior of potential buyers in a market.
In the opinion of Stonier and Hague, “Demand in economics means demand backed up
by enough money to pay for the goods demanded”. In other words, demand means the desire
backed by the willingness to buy a commodity and purchasing power to pay. Hence desire
alone is not enough. There must have necessary purchasing power, ie, .cash to purchase it. For
example, everyone desires to posses Benz car but only few have the ability to buy it. So
everybody cannot be said to have a demand for the car. Thus the demand has three essentials-
Desire, Purchasing power and Willingness to purchase.
Demand Analysis
Demand analysis means an attempt to determine the factors affecting the demand of a
commodity or service and to measure such factors and their influences. The demand analysis
includes the study of law of demand, demand schedule, demand curve and demand forecasting.
Main objectives of demand analysis are;
1) To determine the factors affecting the demand.
2) To measure the elasticity of demand.
3) To forecast the demand.
4) To increase the demand.
5) To allocate the recourses efficiently
Law of Demand
The law of Demand is known as the ‘first law in market”. Law of demand shows the
relation between price and quantity demanded of a commodity in the market. In the words of
Marshall “the amount demanded increases with a fall in price and diminishes with a rise in
price”.
According to Samuelson, “Law of Demand states that people will buy more at lower
price and buy less at higher prices”. In other words while other things remaining the same an
Managerial Economics Page 2
, increase in the price of a commodity will decreases the quantity demanded of that commodity
Managerial Economics Page 3
, MODULE - II
DEMAND CONCEPTS
Meaning of Demand
Demand is a common parlance means desire for an object. But in economics demand is
something more than this. In economics ‘Demand’ means the quantity of goods and services
which a person can purchase with a requisite amount of money.
According to Prof.Hidbon, “Demand means the various quantities of goods that would be
purchased per time period at different prices in a given market. Thus demand for a commodity
is its quantity which consumer is able and willing to buy at various prices during a given period
of time. Simply, demand is the behavior of potential buyers in a market.
In the opinion of Stonier and Hague, “Demand in economics means demand backed up
by enough money to pay for the goods demanded”. In other words, demand means the desire
backed by the willingness to buy a commodity and purchasing power to pay. Hence desire
alone is not enough. There must have necessary purchasing power, ie, .cash to purchase it. For
example, everyone desires to posses Benz car but only few have the ability to buy it. So
everybody cannot be said to have a demand for the car. Thus the demand has three essentials-
Desire, Purchasing power and Willingness to purchase.
Demand Analysis
Demand analysis means an attempt to determine the factors affecting the demand of a
commodity or service and to measure such factors and their influences. The demand analysis
includes the study of law of demand, demand schedule, demand curve and demand forecasting.
Main objectives of demand analysis are;
1) To determine the factors affecting the demand.
2) To measure the elasticity of demand.
3) To forecast the demand.
4) To increase the demand.
5) To allocate the recourses efficiently
Law of Demand
The law of Demand is known as the ‘first law in market”. Law of demand shows the
relation between price and quantity demanded of a commodity in the market. In the words of
Marshall “the amount demanded increases with a fall in price and diminishes with a rise in
price”.
According to Samuelson, “Law of Demand states that people will buy more at lower
price and buy less at higher prices”. In other words while other things remaining the same an
Managerial Economics Page 2
, increase in the price of a commodity will decreases the quantity demanded of that commodity
Managerial Economics Page 3
