Demand

1) Hook — A Fun Real-Life Example

Imagine you are at a popular Indian sweet shop during Diwali. The shopkeeper displays motichoor laddoos at ₹20 each. Suddenly, the price drops to ₹15 due to a festival discount. What happens? More customers rush in to buy laddoos because they are cheaper now. This simple scenario illustrates the basic idea of demand — how much of a product people want to buy at different prices.

2) Core Concepts — Understanding Demand

Demand is the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time.

• Willingness: Desire to buy the product.
• Ability: Having enough money to pay for it.
• Time period: Demand is always measured over a specific time.

Law of Demand: There is an inverse relationship between price and quantity demanded, ceteris paribus (all other factors remain constant). This means:

When price increases, quantity demanded decreases.
When price decreases, quantity demanded increases.

Demand Schedule and Demand Curve

The demand schedule shows the quantity demanded at different prices. The demand curve is a graphical representation of this schedule.

Demand Curve: This is a downward sloping curve from left to right, showing the inverse relationship between price and quantity demanded.

Factors Affecting Demand

• Price of the good (most important)
• Income of consumers: Higher income usually increases demand (normal goods).
• Price of related goods: Substitutes (e.g., tea vs coffee) and complements (e.g., samosas and chutney).
• Tastes and preferences: Festivals like Diwali increase demand for sweets.
• Expectations: If prices are expected to rise, demand may increase now.
• Population: More people means higher demand.

3) Key Formulas / Rules

4) Did You Know?

The concept of demand was first formalized by Alfred Marshall, a British economist, in the late 19th century. Interestingly, in India, the demand for gold during festivals like Akshaya Tritiya can cause global gold prices to fluctuate!

5) Exam Tips

• Always mention “ceteris paribus” when explaining the law of demand to show other factors are constant.
• Do not confuse demand with quantity demanded. Demand is the whole curve/schedule; quantity demanded is a point on it.
• Be clear about factors causing a shift in demand (change in demand) vs movement along the demand curve (change in quantity demanded).
• Practice drawing a neat, labelled demand curve. Board exam questions often require this.
• Previous Year Question Pattern:
  • Define demand and explain the law of demand (2-3 marks).
  • Draw and explain a demand curve (3-4 marks).
  • Explain factors affecting demand with examples (4-5 marks).