This PowerPoint helps students to consider the concept of infinity.
Lecture2
1. Lecture #2
Law of Demand, Determinants of
Demand, Change in Demand and Change in
Quantity Demand
2. • Demand
• Law of Demand
Demand Schedule
Demand curve
• Assumption of Lawof Demand
• Change in Demand
• Change in Quantity Demand
• Change in Demand vs. Change in Quantity Demand
remember you and I are here
“to learn from each other”
Contents….
3. Demand
• Demand is schedule or a curve that shows the
various amounts of product that consumers
are willing and able to purchase at each of
series of possible prices during specified
period of time.
4. Law of Demand
• It states that other things constant, when
price of a commodity rises, the quantity
demand for that commodity falls and when
price of a commodity falls, the quantity
demand for that commodity rises.
“Demand for a product is inversely
proportional to its price”.
5.
6. Demand Schedule Demand Curve
PriceofCoke
Quantity Demand of Coke
D
15
10
5
42 6
Price of
Coke
Quantity Demand
of coke
15 2
10 4
5 6
Price # Qd $
Price $ Qd
Negative relationship
between price and demand
A demand curve is the graphical representation of
the demand schedule; it shows how much of a
good or service consumers want to buy at any
given price.
Demand schedule is a table
showing the relationship
between price and quantity
demand of commodity.
7. Assumption of Law of Demand
• Taste of people remain same
• Fashion does not change
• Season does not change
• Number of Buyers does not change
• Income does not change
• Price of related goods does not change
• Value of money does not change
8. Shift in Demand Curve
• Any change in determinants of demand cause shift in demand
curve.
9. Change In Price of Related Goods
Complements
• Goods that are used together
with another good.
Ink & Pen
Ball & Bat
Car & Petrol
Ham & Egg
• When two goods are
complementary, the price of
one and demand for another
moves in opposite direction.
Price of Ink $ Demand for Pen #
Quantity Demand of Pen
PriceofPen
10. Change In Price of Related Goods
Substitutes
• Goods that can be used in
place of another good.
Pepsi & Coke
Coffee & Tea
Supreme and Lipton
Beef & chicken
• When two goods are
substitutes, the price of one
and demand for another
moves in same direction.
Price of Pepsi# Demand for Coke#
Quantity Demand of Coke
PriceofCoke
11. Change in Quantity Demand
1
1
Change in quantity demand is movement from one point to another from one
price combination to another on a fixed demand curve. An increase in quantity
demand is represented by expansion in demand curve while a decrease in
quantity demand is represented by contraction in demand curve.
12. Change in Demand Vs Change in Quantity Demand
• Change in Quantity Demand is represented by movement along the existing
demand curve. This change in quantity demand is attributed to change in price
of the commodity.
• Change in Demand is represented by shift in demand curve. This change in
demand is attributed to change in other factors of demand instead of change in
price.
