Types of Demand

1) Meaning:

• Individual demand is the quantity of a good that one consumer (or household) is willing to buy at different prices over a time period.
• Market demand is the total amount all consumers in the market are willing to buy at different prices.

2) Example:
If one family buys 2 litres of milk daily (individual demand), and all families together buy 10,000 litres daily (market demand).

3) Key Point:
Market demand is the sum of all individual demands.

1) Ex Ante Demand:
Planned or desired demand; what consumers intend to buy.

2) Ex Post Demand:
Actual demand: what consumers actually buy.

3) Key Point:
Ex ante may differ from ex post due to price changes, availability, or other market factors.

1) Meaning:
Demand for two or more goods used together (complementary goods).

2) Example:

• Cars and petrol, bread and butter.
• Demand for petrol rises if more cars are bought.

3) Key Point:
The demand for one good affects the demand for another when they’re jointly used.

1) Meaning:
Demand for goods/services as inputs needed to produce other goods.

2) Examples:

• Demand for steel is derived from demand for cars.
• Demand for cotton is derived from demand for cloth.

3) Key Point:
Inputs and labour are demanded only if consumers want the final products.

1) Meaning:
Demand for a commodity used for multiple purposes.

2) Examples:

• Electricity (for lighting, cooling, industrial machines)
• Milk (for drinking, desserts, tea)

3) Key Point:
Increasing demand for one use limits its availability for other uses.

1) Meaning:
Quantity of a product that consumers buy at different prices, keeping other factors unchanged.

2) Law:
Price falls → demand rises; price rises → demand falls.

3) Formula:
\[D_A=f(P_A)\]

4) Diagram:

5) Key Point:
Price and demand have an inverse relationship.

1) Meaning:
How demand changes with consumer income, with other factors constant.

2) Types:

• Normal goods: Demand rises as income rises.
• Inferior goods: Demand falls as income rises.

3) Formula:
\[D_x=f(Y)\]

4) Diagram:

5) Key Point:
Normal goods: positive slope; inferior goods: negative slope.

1) Meaning:
How demand for a good changes with the price of a related good.

2) Types:

Substitutes (tea/coffee): Price of coffee rises → demand for tea rises.
Complements (car/petrol): Price of car rises → demand for petrol falls.​

3) Formula:
\[D_x=f(P_y)\]

4) Diagram:

5) Key Point:
Substitutes: direct relation; complements: inverse relation.

1) Meaning:
Consumer goods fulfilling wants directly (food, clothes).

2) Key Point:
Direct satisfaction.

1) Meaning:
Demand satisfied by two or more goods (alternatives).

2) Example:
Rice or chapati for food needs.

1) Meaning:
Demand for close substitutes—using more of one means using less of the other.

2) Example:
More tea, less coffee.