Sahil Jassal_adl04 Managerial Economics.pdf
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Transcript of Sahil Jassal_adl04 Managerial Economics.pdf
traditional theory of demand depends on four of the above determinants that are the price of thecommodity, other prices, income and tastes,Demand for a commodity implies:
1. Desire to acquire it,2. Willingness to pay for it3. Ability to pay for it
Thus the demand for any commodity is the desire for that commodity backed by the willingness aswell as the ability to pay for it and is always defined with reference to a particular time and givenvalues of variables on which it depends.
Demands for a commodity can be grouped into various categories for better understanding of itscharacteristics. The main categories may be:
A. Demand for consumer goods and producers goodsB. Demand for perishable and durable goodsC. Derived and autonomous demandD. Firm and Industry demandE. Demand by total market and industry segments
LAW OF DEMAND
A microeconomic law that states that, all other factors being equal, as the price of a good or serviceincreases, consumer demand for the good or service will decrease and vice versa.
This law summarizes the effect price changes have on consumer behavior. For example, a consumer will purchase more pizzas if the price of pizza falls. The opposite is true if the price of pizzaincreases.