DEMAND & ELASTICITY OF DEMAND

Meaning of Demand : 

The concept of demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time.Demand in economics, is something more than the desire to purchase, though desire is one element of it.A beggar, for instance may desire food but due to lack of means to purchase it, his demand is not effective.Effective demand for a thing depends on

(i) Desire
(ii) Means to purchase &
(iii) Willingness to use those means for that purchase.

Two things are to be noted about the quantity demanded:

1.The quantity demanded is always expressed at a given price. At different prices different quantities of a commodity are generally demanded.

2. The quantity demanded is a flow. We are concerned not with a single isolated purchase, but with a continuous flow of purchases and we must therefore express demand.

DETERMINANTS OF A DEMAND :-

There are number of factors which influence demand for a commodity.All these factors are not equally important.Some of these factors cannot be easily measured or quantified. The important factors that determine demand are as follows :

(i) Price of the commodity
(ii) Price of related commodities
(iii) Income of the consumer
(iv) Tastes and preferences of consumers
(v) Consumer's Expectations
   
   Other factors :
            (a) Size of population
            (b)Composition of population
             (c) The level of national income and its distribution
             (d) Consumer-credit facility and interest rates

ELASTICITY OF DEMAND :

Elasticity of demand is defined as the responsiveness of the quantity demanded of a good to change in one of the variables on which demand depends.Elasticity of demand is the percentage change in quantity demanded divided by the percentage change in one of the variables on which demand depends.

(i) Price Elasticity
(ii) Point  Elasticity
(iii)Arc Elasticity

(1)Income Elasticity of demand

(2) Cross  Elasticity of demand
        (a) price of related goods and demand,
        (b) Substitute products&
        (c) Complementary Goods
(3) Advertisement Elasticity of demand.