Law of Demand Chapter -2 (11th Std New Syllabus 2019) Part- 2 Lecture. Created by Dr Irfana Smadani . This simple but not simplistic and easy to follow 20 minute, lecturer on Theory of demand | law of demand | Micro economics | Class 11 | Class 12( New Syllabus 2019) and C.A, CPT class as well as this lecturer is also meant for the Subjects & Chapters related to Commerce & Management

Change in Demand and Types of Demand In today's lecture, we will discuss the concepts of extension and contraction of demand, increase and decrease in demand, movement along the demand curve, shifts in the demand curve, and the various types of demand. We know that whenever there is a change in the price of a commodity, the quantity demanded also changes. According to the Law of Demand, there is an inverse relationship between the price of a commodity and the quantity demanded. This means that when the price increases, the quantity demanded decreases, and when the price decreases, the quantity demanded increases. Change in Quantity Demanded: Expansion and Contraction A change in quantity demanded occurs only because of a change in the price of the commodity, while all other factors remain constant. Expansion of Demand Expansion of demand refers to an increase in quantity demanded due to a fall in the price of a commodity. Consider a normal demand curve where a certain quantity is demanded at a given price. If the price falls from P to P1, the quantity demanded increases from Q to Q1. This movement occurs along the same demand curve in a downward direction. Therefore, expansion of demand is defined as an increase in quantity demanded resulting solely from a decrease in price, while all other factors remain unchanged. Contraction of Demand Contraction of demand refers to a decrease in quantity demanded due to a rise in the price of a commodity. When the price increases, consumers purchase fewer units of the commodity. As a result, the movement takes place upward along the same demand curve. Thus, contraction of demand is defined as a decrease in quantity demanded caused solely by an increase in price, with all other factors remaining constant. Change in Demand: Increase and Decrease in Demand Unlike changes in quantity demanded, changes in demand occur due to factors other than price. These factors include changes in consumer income, prices of related goods, tastes and preferences, expectations, and population. Increase in Demand An increase in demand occurs when consumers demand a greater quantity of a commodity at the same price due to favorable changes in other determinants of demand. For example: An increase in consumer income increases demand for normal goods. A rise in the price of substitute goods increases demand for the commodity. A fall in the price of complementary goods increases demand for the commodity. In such cases, the demand curve shifts to the right from DD to D1D1. This rightward shift indicates an increase in demand. Decrease in Demand A decrease in demand occurs when consumers demand a smaller quantity of a commodity at the same price due to unfavorable changes in factors other than price. For example, during a recession, people's income levels decline. As income decreases, consumers reduce their consumption expenditure. Even though the price remains unchanged, the quantity demanded falls. Consequently, the demand curve shifts to the left from DD to D1D1. This leftward shift of the demand curve indicates a decrease in demand. Difference Between Change in Quantity Demanded and Change in Demand Expansion and contraction of demand occur due to changes in the price of the commodity and involve movement along the same demand curve. Increase and decrease in demand occur due to changes in factors other than price and involve a shift of the entire demand curve. Types of Demand Demand can be classified into several types depending on the factors influencing it. 1. Price Demand Price demand refers to the relationship between the price of a commodity and the quantity demanded of that commodity, while other factors such as income, tastes and preferences, and prices of related goods remain constant. It explains how quantity demanded changes in response to changes in the commodity's own price. 2. Income Demand Income demand refers to the relationship between the income of consumers and the quantity demanded of a commodity, keeping all other factors constant. It shows how demand changes when consumer income increases or decreases. 3. Cross Demand Cross demand refers to the relationship between the demand for one commodity and the price of a related commodity. The related commodity may be either: A substitute good, such as tea and coffee. A complementary good, such as cars and petrol. Cross demand explains how changes in the price of one good affect the demand for another good. 4. Direct Demand Direct demand refers to the demand for goods that directly satisfy human wants. Examples include food, clothing, and shelter. These goods are demanded because they directly provide satisfaction to consumers. 5. Derived (Indirect) Demand Derived demand refers to the demand for goods or services that arises because they are used in the production of other goods and services. For example, labor is demanded because it helps produce goods. Similarly, land, capital, and raw materials are demanded because they contribute to the production process. Thus, factors of production possess derived demand. 6. Composite Demand Composite demand exists when a commodity can be used for several different purposes. For example, steel is used in the manufacture of machinery, automobiles, construction materials, and tools. Since it serves multiple purposes, it has composite demand. 7. Joint Demand Joint demand occurs when two or more goods are demanded together because they are used jointly to satisfy a particular need. For example, to produce bread, flour, yeast, fuel, and other ingredients are required together. Similarly, a car and petrol are jointly demanded. Therefore, when the demand for one commodity automatically creates demand for another related commodity, it is known as joint demand. Conclusion In this lecture, we discussed the concepts of expansion and contraction of demand, increase and decrease in demand, movement along the demand curve, shifts in the demand curve, and the various types of demand, including price demand, income demand, cross demand, direct demand, derived demand, composite demand, and joint demand. In the next lecture, we will discuss the concept of Elasticity of Demand and the various types of elasticity. Thank you for your attention. Hope you understand the law of demand expansion and contraction of demand, increase and decrease in demand, types of demand next lecture we will discuss elasticity of demand and types of elasticity of demand. If you have any confusion doubt you can comment below or contract me on my watsapp number 6303481790 or on my email isamdnai786@gmail.com