Managerial Economics - Demand Analysis
Introduction of Demand Analysis
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The concepts of demand and supply are useful for explaining what is happening in the market place.
Introduction of Demand Analysis
The concepts of demand and supply are useful for explaining what is happening in the market place. Every market transaction involves an exchange and many exchanges are undertaken in a single day. The circular flow of economic activity explains clearly that every day there are a number of exchanges taking place among the four major sectors mentioned earlier.
A market is a place where we buy and sell goods and services. A buyer demands goods and services from the market and the sellers supply the goods in the market. In economics, demand is “the quantity of goods and services that will be bought for a given price over a period of time”. For example if 10 Lakhs laptops are purchased in India during a year at an average price of Rs.25000/- then we can say that the annual demand for laptops is 10 Lakhs units at the rate of 25,000/-.
This chapter describes demand and supply which is the driving force behind a market economy. This is one of the most important managerial factors because it assists the managers in predicting changes in production and input prices. The manager can take better decisions regarding the kind of product to be produced, the quantity, the cost of the product and its selling price. Let us understand the concept of demand and its importance in decision making.
Demand: Demand means the ability and willingness to buy a specific quantity of a commodity at the prevailing price in a given period of time. Therefore, demand for a commodity implies the desire to acquire it, willingness and the ability to pay for it.
Law of demand: The quantity of a commodity demanded in a given time period increases as its price falls, ceteris paribus. (I.e. other things remaining constant)
Demand schedule: a table showing the quantities of a good that a consumer is willing and able to buy at the prevailing price in a given time period. (Table – 1)
The concepts of demand and supply are useful for explaining what is happening in the market place. Every market transaction involves an exchange and many exchanges are undertaken in a single day. The circular flow of economic activity explains clearly that every day there are a number of exchanges taking place among the four major sectors mentioned earlier.
A market is a place where we buy and sell goods and services. A buyer demands goods and services from the market and the sellers supply the goods in the market. In economics, demand is “the quantity of goods and services that will be bought for a given price over a period of time”. For example if 10 Lakhs laptops are purchased in India during a year at an average price of Rs.25000/- then we can say that the annual demand for laptops is 10 Lakhs units at the rate of 25,000/-.
This chapter describes demand and supply which is the driving force behind a market economy. This is one of the most important managerial factors because it assists the managers in predicting changes in production and input prices. The manager can take better decisions regarding the kind of product to be produced, the quantity, the cost of the product and its selling price. Let us understand the concept of demand and its importance in decision making.
Demand: Demand means the ability and willingness to buy a specific quantity of a commodity at the prevailing price in a given period of time. Therefore, demand for a commodity implies the desire to acquire it, willingness and the ability to pay for it.
Law of demand: The quantity of a commodity demanded in a given time period increases as its price falls, ceteris paribus. (I.e. other things remaining constant)
Demand schedule: a table showing the quantities of a good that a consumer is willing and able to buy at the prevailing price in a given time period. (Table – 1)
Tags : Managerial Economics - Demand Analysis
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