The Various Types of Demand

The demand for a commodity is its quantity which consumers are able and willing to buy at various prices during a given period o f time. Demand is a function of Price (P), Income (Y), Prices o f related goods(P R) and tastes (T) and expressed as D=f(P ,Y,PR,T). When income, prices of related goods and tastes are given, the demand function is D=f (P ). It shows quantities of a commodity purchased at given prices.

THE VARIOUS TYPES OF DEMAND

i. Price demand: Price demand refers to various quantities of a commodity or service that a consumer would purchase at a given time in a market at various hypothetical prices. It is

assumedthatotherthings,suchasconsumer'sincome,histastesandpricesofinter- related goods, remain unchanged. The demand o f the individual consumer is called individual demand and the total demand of the entire consumer combined for the commodity or service is called industry d emand. The total demand for the product of an individual firm at various prices is known as firms demand or individual sellers demand.

ii. Income demand: Income demand indicates the relationship between income and the quantity of commodity demanded. It relates to the various quantities of a commod ity or service that

will be bought by the consumer at various level o f income in a given period of time, other things equal. The inco me demand function for a commodity increases with the rises in income and d ecreases with fall income. The inco me demand curve has a positive slope. But this slope is in the case o f normal goods. In the case of inferior goods the demand curve id is backward sloping

iii. Cross demand: In case o f related goods the change in the price of one affects the demand of the other this known as cross demand and its written as d=f(pr). Related goods are of two

types, substitutes and complementary. In the case of the substitutes o r competitive goods, a rise in the price o f one good a raises the demand, arise in the price of one good a raises the demand for the other good b, the price o f remaining the same the opposite holds in the case of a fall in the price of a when demand for b falls.