Theory of Demand

Lesson

Part 1 — what demand means, its kinds, its determinants and the Law of Demand.

In this lesson you will

Distinguish demand from desire and classify individual, market, joint, composite and derived demand
Write the demand function and explain the effect of each determinant
State the Law of Demand with its assumptions and draw a demand curve from a schedule
Explain why the demand curve slopes downward

Part 1 at a glance

Concept

Demand is more than a wish

In economics, demand is the quantity of a good that buyers are willing and able to buy at a given price during a period of time.

Three elements plus price and time

Diagram

Table of five kinds of demand: individual, market, joint, composite and derived, each with its meaning and an imagined Indian example such as a gas stove with a cylinder for joint demand
Kind of demand	Meaning	Imagined Indian example
Individual	Quantity one buyer wants at each price	One family's weekly milk purchase in Ludhiana
Market	Total of all buyers' quantities at each price	All milk bought in the town at ₹56 a litre
Joint	Two goods wanted together for one use	Gas stove and LPG cylinder
Composite	One good wanted for several uses	Sugarcane for sugar, jaggery and ethanol
Derived	A good or factor wanted for what it helps make	Masons wanted because flats are wanted