Law of Demand Chapter -2 (11th Std New Syllabus 2019),Part- 1 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 | Business Economics ,Class 11 | Class 12( New Syllabus 2019) , C.A, CPT, as well as this lecturer is also meant for the Subjects & Chapters related to Commerce & Management.

Hello student well come to my blog Dr Irfana samdani today I am going to take the topic on Theory of Demand. Chapter -2 this lecturer contents are Meaning of demand, determinates of demand and the law of demand Before moving on the meaning of demand we will try to understand the utility. What is utility? Utility is the want satisfying power of a commodity. Whenever you consume a commodity you drive a sort of satisfaction from the consumption of a commodity and that satisfaction is call as utility. Therefore the satisfaction derived from the consumption of a commodity is utility. Now utility is subjective by nature. Why it is subjective in nature let us take two example first we take two people where one person like chocolate and other person does not like chocolate. The person who like chocolate has been offer chocolate the utility arrived form the chocolate of consumption will be high for him and the person who does not like the chocolate by consuming that chocolate the satisfaction drive will be less or less utility. Now let us take the example of the same commodity say Cadbury daily milk silk the first person first bit of the consumption of chocolate the utility or satisfaction of the first bit will be very high after the consumption of the four five bits the utility of the six bit or last bite will be low comparing to the utility of the first bite of consumption of the chocolate. Whenever the utility or satisfaction from a commodity you drive is high then the desire to have that commodity will be high because the satisfaction drive from that commodity or utility of that commodity is high. That is why the desire to have that commodity will be high. One thing you need to keep in mind that the demand for the commodity is not equal to the desire of that commodity just because the desire or what for any commodity will not turn into demand in order to convert your desire into demand. Certain condition need to be fulfill first will be availability of resources. We should have purchasing power to by the commodity means you should have enough money to buy the commodity that you desire. Ready to spend the resources this means you are ready to spend the money in order to obtain a particular commodity you want or desire. Availability of the commodity that you want to purchase that is the commodity you want to buy is available in the market. Here I listed the important characteristic in the definition of demand. Definition say that total quantity of commodity that a buyer is willing to buy with he is able to purchase that commodity at a given price during the particular time period. This are the important characteristic of the definition of demand that is the total amount of commodity that you want to buy , willingness to buy means the consumer have the desire to purchase that commodity means some is not forcing the consumer to buy that commodity he is purchasing it with his won will. Next comes ability to purchase the commodity means have the enough money to purchase the commodity and he is ready to spend that money at a given prices means the price which is quoted in the market is given and your willing to buy that commodity at the given price or market quoted price and during the particular time period. That is within a week or within a month. Next we will discuss the determinants of demand. Now demand function express the functional relation between the demand and its determinants. That is it tell you how demand is depends on the determinants of demand. Now the demand function here says that demand for a commodity n is depend on the price of commodity n and the price of related goods income of the consumer taste and preference of the consume. Now there are two kind of related goods that is substitutes and complimentary. First we discuss substitute good as the name suggest when two good can be used in place of each and other they call substitute for example coke and Pepsi suppose a person is indifferent between consuming coke and Pepsi means rather the consumer derive the same satisfaction from both the commodity coke and Pepsi when there is increase in the demand of coke then the price of Pepsi kept constant the demand of pepsi will increase because the Pepsi price is less than coke. Similarly in the case of complimentary goods this good are good which compete with each other they are complimenting each other in case of complimentary good utility or satisfaction of derive from one good become zero in the absence of other goods for example ball pen and refill a ball pen body without refill is no use and a refill with you ball pen body had no use. Therefore if the price of refill increases the demand for ball pen will decrease so the utility of ball pen become zero in absence of refill. And the utility of refill in absence of ball pen become zero. Now let us move to the other factor of the demand that is the taste and preferences of consumer if the consumer developed the positive taste for the commodity let say tea then the demand for tea will increase and suppose if a consumer developed a negative taste or a negative preference for coffee then the demand for coffee will decrease now let us move to the income of the consumer this also a determinants of demand now there are three good come in this but I will not go much into detail but in order to explain the relationship between the income and the demand I will segregate the types of goods and let you know demand for different types of good are related to the income of consumer in this first comes normal goods In this case if there is increase in the price of good the demand for the good also increases example milk if the income of the consumer increase then the demand for milk will increase that is if we use to consume milk less than once income increase then we increase the consumption of milk. In the case of inferior commodities with the increase in income the demand for the good decreases. This inferiority is related to the affordability of the good but not the quality of the good for example there are two commodity in the market that is wheat and jowar person who was consuming jowar now with the increase in the income the demand for jowar with fall now he want to purchase wheat which cannot afford before.so the movement from the jowar to wheat with the increase income decrease the demand for jowar. Next comes Geffen goods. Are the special kind of inferior goods in case of good if the price increases the demand for good also increase. Now we will discuss the law of demand now question arises what is law of demand the law of demand states the other factors being the same if the price of the commodity increases the demand for that commodity contracts and with the fall in the price of the commodity the demand for the commodity expands in other words we can say price and demand are inversely related to each other. Now question before us is what this other things are. Other things being the same refer to the assumption of demand it has been assume that there is no change in the price of related goods and no change in the income of the consumer and no change in the taste and preference of the consumer. Now you see the law demand state that if the price of particular commodity rises then the demand for a particular commodity fall down it means that if the price of commodity rises undoubtedly it can be afford by the some customer and if it became un affordable for customer then they will demand less when they demand less obviously the quantity demand will fall.in the same way if the price will fall the quantity demand will rise because due to fall in price it will become affordable for many customers. And if they will be able to afford it they will increase its demand the demand will rise ultimately the quantity demand will rise.so it’s a very simple reason I am providing right now later on we will discuss in detail at this movement you need to remember that in law of demand if prices rises the demand fall down and if price decreases the demand for goods increases there is inverse relation between the price and quantity demand. Here there is point other factors remain constant now what is this other factor remain constant you need to understand carefully it means all factors other than price that can affect the demand for commodity first of all you need to know that whenever you’re writing demand you need to remember that you have to write demand for never write demand of. Other factor means other than price which affect demand. Lets take an example income see if the income of a consumer will rise consumer will be able to affords the better quality of goods yes or no and if they will be able to afford the good then the demand for good will rise therefore in India the per capita income I rising people may be able to afford more iPhone or smart phone of Samsung, and so many companies are there in this case the demand for smart phone will rise. So income is one of the coterie in other factors which affect the demand for any commodity. The main thing in the law of demand is that when the prices will rise the quantity demand will fall only in one condition when other factor are remain constant here considering income as other factor what I want to say that if the prices rising quantity demand will fall the income remain constant as the income incomes in other factors why so when other factors remain constant then law of demand operates let us take an example suppose we plan to buy a smart phone it might be around 30000 when you go to show room and ask for smart phone that was rs 80000 now you went to purchase that phone when you go to show room the shop keeper say that now this phone will cost you rs 1 lakh why due to increase in taxes it will cost you one lakh so now what you will do weather you buy the phone or not buy because the price has increase you will not buy you will come back to the home so in this way due to increase in price the quantity demanded will fall down. Now take another example now you went of the showroom you refuse to buy the phone and your coming back to home you’re on the way at that time your boss call you and said you salary has been increased from the back date this June and your salary has been increase from January and you will received the areas for that from Jan to Jun approximately you will received the areas rupees 50000 this what the boss communicate with you on call. So this means you income has increase right so what you will do you’re on the way you’re going back to your home on call your boss told you that you are salty increase and you’re going to received 50000 obviously you will go back and purchase the smart phone in first case you went to show room you dint buy the phone because price increase but your income was constant case 1 price increase but income was constant you reuse to purchase but in second case you went back and purchase the phone because you income increases in case two the prices increase with that you income also increase so you don’t have any problem so you decided to purchase. So due to rise in price here you refuse to buy where in the case the law of demand is operational but in the case two the law of demand is not operational because with the increase in price the income also rises and you will buy it there will be no problem at all in affordability in the sense of affordability so in order to law of demand to get operational first thing that you need to understand other factors should remain constant if other factors are not constant they are also changing they might be law of demand will not operates this the very simple example I gave at this point of time later on we will discuss other factors in detail. So what exactly the law of demand is when the price of commodity rises the quantity demand will falls and vice versa provided other factors remain constant now let us understand with the help of a table price and quantity demanded price 5 10 15 suppose at the price 5 rupee the demand for good is 100 when price increases from 5 to 10 the demand will fall say 80 father increase in price to 15 then the demand will be father fall that is to 60 this table is clearly indicating the relationship between price and quantity demand as per the law of demand now considering this we can draw a diagram for demand curve also. On x axis we will take non-monetary item that is quantity demand on y axis you will take the monetary item that is price SO IN PRICES 5, 10 15 20 and quantity demanded is 20 40 60 80 100 I have to take on x axis now when th price is rs 5 the qd is 100 when the price rs 10 quantity demanded is 80 when th price I 15 qd is 60 so by joining this three points we can draw a demand curve this will be a straight line it is looking like a zig zak but actually but it will be a straight line so you can see the deamnd curve will downward sloping curve from left to right so whenever there is inverse relationship means one variable will be rising and other is falling or one is falling and other is rising then you will know always there will be a downward sloping curve so how the demand curve will look like y x quantity price when the price will fall from P1 to P the quantity demand will increase from Q1 to Q when the price will fall from P to P2 then the quantity demand increase from Q ro Q2. So this exactly the law of demand. Hope you understand the law 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 if your unable to find my video you can watch my video on my blog https://isamdani786.blogspot.com follow my lecturer on my block view it on youtube , chare it with your friends and subscribe my your tube channel World of Economics and do not forget to click on like. Next video we will discuss the factor affecting demand, change in quantity demand extend in demand contraction increase and decrease in demand ok thanks for watching my lecture if you like my video please click on like and do not forget to subscribe my channel to get information of up coming videos.