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Lecture 3 Demand

The document outlines the principles of economics, focusing on market definitions, demand concepts, and demand curves. It includes examples of individual and market demand functions, as well as tasks for students to derive demand schedules and curves. The instructor is Atul Chandra Singha from Begum Rokeya University, and the document serves as a guide for understanding demand in economics.

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7 views19 pages

Lecture 3 Demand

The document outlines the principles of economics, focusing on market definitions, demand concepts, and demand curves. It includes examples of individual and market demand functions, as well as tasks for students to derive demand schedules and curves. The instructor is Atul Chandra Singha from Begum Rokeya University, and the document serves as a guide for understanding demand in economics.

Uploaded by

alext.demo1
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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STAT 1105:Principles of Economics

Instructor,
Atul Chandra Singha(AC)
Assistant Professor
Department of Statistics
Begum Rokeya University, Rangpur(BRUR).
Email: [email protected]

Weblink: https://brur.ac.bd/department/department-of-statistics/people/details/235
Market

Market is a place which there is at least a buyer and a seller


and an exchange takes place. Market participants include
buyers, sellers, and government.
Types of Market
Demand: Demand to refer to
the amount of some good or
service consumers are willing
and able to purchase at each
price.
Ceteris paribus assumption

Example:
By varying the price
of the commodity
under consideration
while keeping
constant the
individual’s money
income and tastes
and the prices of
other commodities.
Demand • Demand curve is a graphical representation of
the relationship between prices of commodities
Curve and their associated quantities demanded.
Demand determinants
Individual demand for a commodity
Individual demand for a commodity
𝑄𝑑𝑥 = 𝑓(𝑃𝑥 , 𝑀, 𝑃0 , 𝑇)
Where,
𝑄𝑑𝑥 = the quantity of commodity 𝑿 demanded by the
individual, over the specified time period.
𝑓= a function of, or depends on
𝑃𝑥 = the price of commodity 𝑿
𝑀= the money income of the individual
𝑃0 = the prices of other commodities
𝑇= the tastes of the individual

Home Task:
How do we arrive (from above formula) at the expression
𝑄𝑑𝑥 = 𝑓 𝑃𝑥 𝑐𝑒𝑡. 𝑝𝑎𝑟. ?
Demand
Schedule
Demand schedule is
tabular representation of
the relationship between
prices of commodities
and their associated
quantities demanded.
EXAMPLE 1
Suppose that an individual’s demand function for commodity
X is 𝑄𝑑𝑥 = 8 − 𝑃𝑥 ceteris paribus. By substituting various
prices of X into this demand function, we get the individual’s
demand schedule shown in below.
𝑷𝒙 8 7 6 5 4 3 2 1 0

𝑸𝒅𝒙 0 1 2 3 4 5 6 7 8

The individual’s demand schedule for commodity X shows the


alternative quantities of commodity X that the person is
willing to purchase at various alternative prices for
commodity X, while keeping everything else constant.
Home Task

From the demand function 𝑄𝑑𝑥 = 12 − 2𝑃𝑥 (𝑃𝑥 is


given in dollars), derive
(a) the individual’s demand schedule and
(b) the individual’s demand curve,
(c) What is the maximum quantity this individual will
ever demand of commodity X per time period?
Shifts in the Individual’s Demand Curve
The market demand for a commodity
Example 5
If there are two identical individuals (1 and 2) in the market,
each with a demand for commodity X given by 𝑄𝑑𝑥 = 8 −
𝑃𝑥 ceteris paribus, the market demand (𝑄𝐷𝑥 ) is obtained as
indicated in Table 2.2 and Fig. 2-2.
Example 6
Home Task
Table below gives three individuals’ demand schedules for commodity
X. Draw these three demand curves on the same set of axes, and
derive geometrically the market demand curve for commodity X (on
the assumption that there are only these three individuals in the
market for X).
Quantity demanded
(per unit of time)
𝑷𝒙 ($)
Individual-1 Individual-2 Individual-3

6 9 18 30
5 10 20 32
4 12 24 36
3 16 30 45
2 22 40 60
1 30 60 110
That’s all….

Thank you

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