Elementary Theory Of Demand — Flashcards

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Demand means desire for a commodity backed by purchasing power. In simple words, a want becomes demand only when a consumer has both willingness and ability to buy the good at a given price and time.

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Effective demand means desire plus purchasing power. It is also called effective desire or want. A want becomes demand only when it is stated with reference to price and period of time.

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Demand is a flow concept because it is expressed per unit of time, such as per day, per week, or per month. Demand is not just a quantity; it is a quantity demanded during a time period.

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Demand is the quantity of a good or service consumers are willing and able to buy at different prices during a period of time. Quantity demanded is the amount people will buy at one particular price a…

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The demand function shows the relation between demand and its determinants. It is written as D_{X}=f(P_{X}; P_{r}; Y; T ...). Here, demand depends on the price of the good, price of related goods, inc…

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It is written as Q_{x}=f(P_{x}). It shows that quantity demanded of a good changes with its own price when other factors remain constant.

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Law of demand states the inverse relationship between price and quantity demanded, keeping other factors constant. This means that when price rises, quantity demanded falls, and when price falls, quan…

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The law of demand tells only the direction of change, not the magnitude of change. It is qualitative, not quantitative. It does not say by how much demand will change when price changes.