swot analysis of demand
TRANSCRIPT
-
8/9/2019 Swot Analysis of Demand
1/26
` Presented by:-
Susmita Jha
-
8/9/2019 Swot Analysis of Demand
2/26
` The demand for anything, at a given price, is the amount of it,
which will be bought per unit of time, at that price.
` By demand we mean the various quantities of a given
commodity or service which consumers would buy in one market
in a given period of time at various prices.
` Requisites:
a. Desire for specific commodity.
b. Sufficient resources to purchase the desired commodity.
c. Willingness to spend the resources.
d. Availability of the commodity at
` (i) Certain price (ii) Certain place (iii) Certain time.
-
8/9/2019 Swot Analysis of Demand
3/26
` The law of demand states that higher the price,
lower the demand, and vice versa, other things
remaining the same.
` Its an inverse relationship between price andcommodity.
Exceptions to the law of demand are
Giffen goods.
Conspicuous consumption.
-
8/9/2019 Swot Analysis of Demand
4/26
0
510
1520
25
3035
40
0 2000 4000 6000 8000 10000 12000 14000
Quantity
Price
Old demand New demand Supply
`An increase indemand shifts
the demandcurve to the right.
` Equilibrium priceincreases.
`
Quantitydemandedincreases.
-
8/9/2019 Swot Analysis of Demand
5/26
0
5
10
15
20
25
30
35
40
0 2000 4000 6000 8000 10000 12000 1400
Quantity
Price
Old demand New demand Supply
` A decrease indemand shiftsthe demand
curve to theleft.
` Equilibriumprice falls.
` Quantitydemanded falls.
-
8/9/2019 Swot Analysis of Demand
6/26
1. Individual demand2. Market demand
3. Income demand
- Demand for normal goods (price ve, income +ve)
- Demand forinferior goods (eg., coarse grain)
4. Cross demand
- Demand for substitutes or competitive goods (eg. tea & coffee, bread and rice)
- Demand for complementary goods (eg., pen & ink)
5. Joint demand (same as complementary, eg., pen & ink)
6. Composite demand (eg., coal & electricity)
7. Direct demand (eg., ice-creams)
8. Derived demand (eg., TV & TV mechanics)
9. Competitive demand (eg., desi ghee and vegetable oils)
10. Demand of unrelated goods
-
8/9/2019 Swot Analysis of Demand
7/26
Price
Determinants of
DemandIncome
Number of
Buyers Prices of other
goods
Tastes
Expectations
about future
Quality
Supply?
-
8/9/2019 Swot Analysis of Demand
8/26
` Price of the commodity Normally there is an inverse relationship
between the price of the commodity and the quantity demanded. (Px)
` Income of the Consumer Determines the purchasing power of the
consumer. Generally, there is a direct relationship between the income
of the consumer and demand. (Y)
` Consumers taste and preference (T)
` Price of related commodities (Pr)
` Consumer Expectation (expected change in price)
` Distribution of income
` Size and composition of population
` Other Factors e.g., natural calamities
Qdx = f (Px, Pr ,Y , T, D)
-
8/9/2019 Swot Analysis of Demand
9/26
` Demand Schedule: a tabular presentation
showing different quantities of a commodity
that would be demanded at different prices.
Types of Demand Schedules
Individual Demand ScheduleMarket Demand Schedule
Shows various quantities of acommodity that would bepurchased at differentprices by a household.
Shows the various commoditiesthat would be purchased atdifferent prices by all thebuyers of that commodity. Itis composed of the demandschedules of all the individuals
purchasing that commodity.
-
8/9/2019 Swot Analysis of Demand
10/26
` Availability of substitutes
` Postponement of consumption
` Proportion of expenditure (needles: inelastic; TV: elastic)
` Nature of the commodity (necessity vs. luxury)
` Different uses of the commodity (paper vs. ink)
` Time period (elastic in the long term)
` Change in income (necessaries: inelastic)
` Habits
`
Joint demand` Distribution of income
` Price level (very costly & very cheap goods: inelastic)
-
8/9/2019 Swot Analysis of Demand
11/26
` Price elasticity of demand
` Income elasticity
` Cross price elasticity
` Advertising elasticity
-
8/9/2019 Swot Analysis of Demand
12/26
Elastic Demand or more than 1 When quantity demandedresponds greatly to price changes
Inelastic Demand or less than 1 When quantity demanded
responds little to price changes.
Unitary Elastic When quantity demanded responds equally to
the price changes. Perfectly inelastic or0 elastic demand
Perfectly elastic or infinite elastic demand
Economic factors determine the size of price elasticity for
individual goods. Elasticity tends to be higher when the goodsare luxuries, when substitutes are available and when
consumer have more time to adjust their behavior.
-
8/9/2019 Swot Analysis of Demand
13/26
` Income elasticity may be defined as the degree of
responsiveness of quantities demanded to a given
change in income.
`
Properties luxury goods eI > 1
necessity 0 < eI < 1
inferior goods eI < 0
-
8/9/2019 Swot Analysis of Demand
14/26
` Zero income elasticity
` Negative income elasticity
` Positive income elasticity
-
8/9/2019 Swot Analysis of Demand
15/26
` Cross price elasticity is responsiveness of demand
of a good to changes in another goods price
` Cross elasticity of demand measures the
proportionate change in the quantity demanded ofa particular commodity in response to a change in
the price of another related commodity.
-
8/9/2019 Swot Analysis of Demand
16/26
` Properties ec > 0: substitute
ec = 0: independent
ec