Answer the following: Explain any four types of demand. - Economics

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Answer in Brief

Answer the following:

Explain any four types of demand.

Write a short note:

Types of demand

What are the types of demand?

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Solution

In Economics, demand means a desire which is backed by willingness and ability to pay. The following are the types of demand:

  1. Individual Demand:
    Individual demand is the quantity of a commodity demanded by an individual (single) consumer at a given price during a given period of time.
  2. Market Demand:
    Market demand is the total demand for a commodity by all consumers at a given price during a given period of time.
  3. Joint Demand or Complementary Demand:
    When two or more goods are demanded jointly to satisfy one single want, it is known as joint or complementary demand.
    E.g.: To satisfy the need of making tea, we need water, tea powder, sugar and milk. Thus, we can say that there is joint demand for these goods. Other examples: Car and petrol, pen and refill, mobile and charger etc.
  4. Composite Demand:
    The demand for a commodity which can be put to several uses is known as composite demand. In other words, it refers to the demand for a commodity which can be used to satisfy two or more wants.
    E.g.: Electricity can be used to satisfy the want of watching TV, using the washing machine, charging your mobile etc.
  5. Competitive Demand:
    When two or more commodities can be used alternatively to satisfy the same want, then such goods are said to be substitutes for each other. Competitive demand refers to the demand for those goods which are substitutes for each other.
    E.g: Tea or coffee, sugar or jaggery, Pepsi & Coke, Surf Excel & Tide etc.
  6. Indirect/Derived Demand:
    The demand for goods which are needed in order to produce finished goods is called indirect demand. Indirect demand is also called as derived demand. It is the demand for producer’s goods. All factors of production have indirect demand.
    E.g.: Demand for land, labour, capital etc. is derived demand.
  7. Direct Demand:
    The demand for goods which satisfy the wants of consumer directly is called as direct demand. All finished goods or consumption goods have direct demand.
    E.g.: Demand for food, clothes and house are examples of direct demand.
Concept: Types of Demand
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Chapter 3: Demand Analysis - Exercise 3 [Page 24]

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