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Demand - Coggle Diagram
Demand
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Exceptions
Economic depression: During an economic depression, people prefer to survive on exsisting goods, even if the prices fall. Hence, with the decrease in price, the demand also decreases
Giffen's paradox: Goods whose demand increases with the price are called giffen goods. For eg: For a poor person. rice is a giffen good. He would prefer to buy expensive rice ather than cheap meat, as the meat would wear out in a few days, whereas the rice would be there for the long term
Veblen goods: The demand for these decreases with the price. EG: For the rich people, diamonds are veblen goods. If the price decreases, then they won't buy them, so as to maintain their status quo.
Demonstration effect: A strategy adpoted by may businesses, which increases the demand with the price. The businesses use celebrities to promote their products, so that consumers come under their unfluence, and be urged to buy that product, no matter how expensive it might be
War like conditions: During these, there is scarcity of resources. There is more demand than there is supply. Therefore, people are prepared to buy products, even if they are expensive. So, with the increase in price, the demand also increases
Natural calamities: During a natural calamity, there is scarcity of food. In order to survive, people pay for large amount of food, even if it is extremely expensive. Hence, the demand increases when the price increases.
What is it?
Demand is the willingness and ability to pay for a product at a particular point of time in a specific market for a given price
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Law of demand
The law of demand shows an inverse relationship between the price and the quantity demanded. Other things being equal (ceteris paribus), as the price of a good increases, the quantity demanded decreases, and as it decreases, the quantity demandec increases.
Demand curve
Locus of points showing the various alternative price-quantity demanded combinations. It slopes donwards on the right, and shows the inverse relationsip between price of a good, and quantity demanded (law of demand)
Conditions of demand
The factors, other than price that influence a change in the demand of a product.
Income: When the income of a person increases, they are able to afford better products, and therefore, the demand for some products increases, and for some, it decreases.
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Popularity: Due to the changing consumer tastes, the popularity of some products increases, and for some it decreases. This can be influenced by ad campaigns
Consumer tastes and preferences: The consumer tastes keep chaning, and so does the demand for products. EG: If consumers tart to prefer coffee over tea, then there wiuld be a higher demand for coffee, and a decrease in the demand for tea.
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Age distribution: If there are more children in a country, then more toys will be produced
Size of population and its composition: If the population increases, the dmeand for products will also increase. According to the composition of the population, the demand for products is decided. EG: a population with a large number of old people, would have a high demand for wheelchairs, and medicines.