Page 24 - DECO405_MANAGERIAL_ECONOMICS

Anand Thakur, Lovely Professional University
Unit 2: Market Demand

Unit 2: Market Demand Notes

CONTENTS
Objectives
Introduction

2.1 Market Demand
2.1.1 Determinants of Demand
2.1.2 Basis of Demand

2.1.3 Direct and Derived Demand
2.1.4 Law of Demand
2.2 Summary

2.3 Keywords
2.4 Self Assessment
2.5 Review Questions

2.6 Further Readings

Objectives

After studying this unit, you will be able to:

Identify the determinants of demand
Know the basis of demand
State the law of demand

Introduction

Demand and supply are two most fundamental concepts in economics. Demand conveys a wider
and definite meaning than in the ordinary usage. Ordinarily, demand to you would mean your
desire to buy something, but in economic sense it is something more than a mere desire. It is
interpreted as your want backed up by your purchasing power. Further demand is per unit of
time such as per day, per week etc. Moreover, it is meaningless to mention demand without
reference to price. Considering all these aspects the term demand can be defined in the following
words, “Demand for anything means the quantity of that commodity, which is desired to be
bought, at a given price, per unit of time.”

Example: Suppose price of a pen is 10 per unit of time. At this price, people are willing
to buy 100 units of that pen at a specific point of time. So, it is the demand for that pen.

LOVELY PROFESSIONAL UNIVERSITY 19