ECONOMICS DEMAND
Define Demand and Explain Various Types of Demand
Demand: The demand for the product is the desire for that product backed by willingness as
well as ability to pay for it. It is always defined with reference to a particular time, place price
and given values of other variables on which it depends.
Demand for the product implies
Desire to acquire it.
Willingness to pay for it.
Ability to pay for it.
Various type of demands are
1. Direct and derived demands: Direct demand refers to demand for goods meant for final
consumption. By contrast, derives derived demand refers to demand for goods which are
needed for further production. It is the demand for producer's goods like industrial raw
material, machine tools and equipments.
2. Autonomous and induced demand: When the demand foe the product is tied to the
purchase of some parent product, its demand is caved induced or derived. For example the
demand of cement is derived from demand for housing. Autonomous demand, on the
other hand is not derived or induced. All direct demand may be loosely called
autonomous.
3. Perishable and durable goods demand: Both consumer's goods and producer's goods are
classified into perishable and non durable, single use goods, durable, non perishable,
repeated use goods. Non-durable goods meet immediate demand, but durable goods are
designed to meet current as well as future demand as they are used than ones. When
durable items are purchased, they are considered to be an addition to stock of assets or
wealth. Due to continuous use, durables suffer depreciation and thus call for replacement.
Thus the demand for durable goods has two aspects-replacements of old products and
expansion of total stock.
4. New demand and replacement demand: If the purchase of an item is meant as an addition
to stock, it is a new demand. If the purchase of an item is meant for maintaining the old
stock of capital/asset intact, it is replacement dem
