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Demand (Factors Affecting Demand (Prices of related goods (Demand…

- - - - Is Decisively Affected due to price.
  - - - Directly Relation with income
  - - - Affects
        
        Prices of other goods
    - - Tea and Coffee
        
        Conditions
        
        Increase In consumption of one good
        
        Decreses Demand for other
        
        Decline in Price
        
        Reduction of Demand for another one.
  - - - Demand
  - - - MORE Demand for normal commodities
  - - - Influences Demand For Different Commodities
  - - - More Purchasing Power
        
        For People
  - - - More Demand ,eventually
  - - - In a country
        
        Influence Demand for certain commodities
        
        Boom Conditions
        
        Increase in Demand
        
        Depression
        
        Demand is low
  - - - Taxing Commodities more , increases its price and Demand goes down
      - Financial Help
        
        Through Subsidies
        
        Increases Demand
  - - - Demand For Goods Decreases
        
        As he keeps cash ready with him
- - - - Decreases
        
        Rise in price
        
        With
      - Increases
        
        Fall in price
  - - - Money and Real income , Wealth
        
        Must Remain Same
    - - Related to this commodity
        
        Should not change
    - - Substitutes
  - - - Relation
        
        Between
        
        Price of Commodity
        
        And Amount of that commodity wished by consumer to purchase
    - - Law of Diminishing Marginal Utility
        
        Price of Commodity Falls
        
        Consumer purchases more of the commodity
        
        Reason = So that his marginal utility from the commodity falls
        
        equating to that of reduced price
      - New Consumers
        
        Falling in Price
        
        Attracts New Consumer
      - Income effect
        
        Rise in "Real Income"
        
        As same commodity available at less amount
      - Substitution Effect
        
        Price of a commodity Decreases
        
        Making Cheaper in comparison to other commodities
        
        Consumer Substitutes the commodities
      - Different uses of Commodity
        
        Arises
        
        With reduction of prices
  - - - Sir Giffen Pointed Out
        
        Law of Demand doesn't applies to
        
        Inferior goods
        
        Eg: Bread, Rice ,jowar,bajra etc
      - Giffen paradox
        
        price of bread falls in market ,
        
        The saved money is used to purchase something else
        
        Demand for bread
        
        Decreases
        
        Direct Relationship - Price and Demand
        
        Change in price = Change in demand
    - - Veblen
        
        Explained
        
        Demand for Articles of Distinction
        
        Diamond and Jewellery
        
        More
        
        When Prices are High
    - - People Rush
        
        Expecting a change of price
    - - Consumer Think
        
        Low Price
        
        Quality Bad
        
        High Price
        
        Quality Good
- - - - Due to other things
      - Due to change in price
  - - - Fall in price
        
        Amount Demanded goes up
        
        Or extends
  - - - Rise in Price
        
        Demanded is reduced or contracted
  - - - Demand Shifts to another Demand Curve
        
        On the right side and above
  - - - Demand shifts to another Demand Curve
        
        On the left side and Below
- - - - Consumer would purchase at a given time
        
        AND Various Prices
  - - - Purchased at various level of Income
  - - - Purchased with reference to change in price not of this good but of other inter-related goods.
        
        Consider Apple and Samsung Mobile Launch in this regard , both are slated to release at same time of year. People , buy Samsung after knowing about more features and in less price.
- - - - In response to a given change in price of the commodity,
  - - - Definition
        
        Measure of relative change
        
        In amount purchased
        
        In Response
        
        To a relative Change in Price
        
        On a Given Demand Curve
      - Degrees of Elasticity of Demand
        
        5 Cases
        
        Perfectly Elastic
        
        Small Change or Constant price
        
        Creates an infinitely large change in demand
        
        Rare life example
        
        Relative elastic
        
        Small proportionate change in price
        
        Large proportionate change in quantity demanded
        
        Unitary elastic
        
        Change in price
        
        Accompanied by equal change in Demand
        
        Perfectly inelastic
        
        Substantial Change in Price
        
        But Demand is Unaffected
        
        Relatively Inelastic
        
        Big proportionate change in price
        
        Small change in demand
      - Measurement of price elasticity of Demand
        
        Proportionate Method
        
        Elasticity of demand is proportional change of amount purchased in response to a small change in price divided by proportional change of price
        
        n= ^q/^p . p/q
        
        Total Outlay or Total Expenditure Method
        
        Elasticity of Demand can be measured
        
        from the changes in the expenditure of consumers on commodity as its price changes
        
        Marshall gave 3 cases
        
        Unity
        
        If change in price of commodity , leaves total expenditure by consumers on the commodity to be same
        
        Case of unity
        
        greater than unity
        
        If small fall of commodity results in a increase of total expenditure on it
        
        Elasticity of Demand is greater than one
        
        Less than unity
        
        If small Fall in the price of the commodity results in a fall of total expenditure on it
        
        Elasticity of Demand is less than one
        
        https://www.google.com/search?q=total+outlay+method&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjJl5fh5Y3gAhUjSI8KHXeWBkIQ_AUIDigB&biw=1536&bih=754#imgrc=Tc9XipaSwLlNbM:
        
        Geometric or Graphic Method or Point Elasticity Method
        
        Marshall Explained this method as
        
        On demand curve refer relevant points , it will indicate whether demand is perfectly elastic , inelastic or any other thing
        
        https://www.google.com/search?q=geometric+method+of+price+elasticity&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiwrJbY543gAhVEKY8KHUdMDzkQ_AUIDigB&biw=1536&bih=706#imgrc=7Dc6zur6kB6tHM:
        
        This method attempts to measure elasticity of demand at a particular point on demand curve
        
        Arc Elasticity Method
        
        The arc elasticity is the elasticity of one variable with respect to another between two given points. It is the ratio of the percentage change of one of the variables between the two points to the percentage change of the other variable.
    - - Income elastic demand is the ratio of percentage change in the quantity demanded to the percentage change in income
        
        Ey= y/q . ^q/^y
      - Perfectly elastic
  - - - Price of commodity at particular time in market
        
        Is high or low from view point of consumers
        
        High priced commodities such as diamond and low priced commodity such as salt have low elasticity
        
        Bcoz change in price has little impact on the consumers
    - - For neccesaries
        
        Elasticity -Low
      - Luxuries
        
        Elasticity - High
        
        Association- Bhartiya Mahila when Golds price are decreased 😈
    - - Commodity having close substitutes at a reasonable price
        
        Demand for them will be price elastic
    - - High Income of Consumers- Elasticity for high qualities good are high
      - Poor class has high elasticity, for the case considered above.
    - - Smokers of cigarettes and liquor drinkers have low price elasticity
    - - In short period - elasticity is low and high in long period
- - - - Willing to Buy
        
        What he DESIRES
        
        Then Desire Changes into DEMAND
  - - - Always
        
        At a price
        
        per unit of time
        
        (Utilitarian)?
    - - The Quantity
        
        OR the amount of the commodity
        
        Consumers are prepared to buy
        
        At Particular Price
- - - - At any given Price
        
        Is : Amount of it which will be bought per unit time at that price.
        
        This Cucumbered Shit is of Prof Benham