MindMap Gallery Demand Analysis features
Demand analysis is a process that involves studying and understanding the factors that influence the demand for a product or service. It helps businesses make informed decisions about pricing, production, marketing, and overall strategy. Here are some key features of demand analysis。
Edited at 2023-07-27 15:34:29Demand analysis is a process that involves studying and understanding the factors that influence the demand for a product or service. It helps businesses make informed decisions about pricing, production, marketing, and overall strategy. Here are some key features of demand analysis。
Utility analysis is a powerful tool used in various fields, including economics, decision-making, and project management. It involves the assessment and quantification of the value or utility derived from a particular decision, action, or investment. This mind map will explore the concept of utility analysis, its key components, and its applications in different contexts. It will delve into the various techniques and frameworks used to evaluate utility, such as cost-benefit analysis, multi-criteria decision analysis, and risk analysis.
Demand analysis is a process that involves studying and understanding the factors that influence the demand for a product or service. It helps businesses make informed decisions about pricing, production, marketing, and overall strategy. Here are some key features of demand analysis。
Utility analysis is a powerful tool used in various fields, including economics, decision-making, and project management. It involves the assessment and quantification of the value or utility derived from a particular decision, action, or investment. This mind map will explore the concept of utility analysis, its key components, and its applications in different contexts. It will delve into the various techniques and frameworks used to evaluate utility, such as cost-benefit analysis, multi-criteria decision analysis, and risk analysis.
Demand Analysis features
Definition of Demand
According to Benham, "The Demand for anything at a given price is the amount of it which will be bought per unit of time at that price
Demand is relative & is expressed with reference to time & place
Demand Schedule
Individual Demand Schedule
Individual demand is the quantity of commodity demanded by consumer at a given price during a given period of time
It is a tabular representation showing different quanties of commodities that an individual consumer is preapred to buy at various prices over a given period of time
Market Demand Schedule
Market demand is total demand for a commodity from all the consumers at a given price during a given period of time
It is a tabular representation showing different quantities of commodity which all consumers are prepared to buy at various prices over a given period of time
Reasons justifying downward demand curve
Law of DMU
A consumer tens to buy more when the price falls & Vice-Versa this implies that demand curve is downwards sloping
Income Effect
When price falls purchasing power of consumer increases which enables him to buy more of the commodity
Substitution Effect
In case of substitute goods, when the price of commodity rises the consumer tens to buy more of its substitute & less of that commodity
Multipurpose uses
When a commodity can be used for satisfying several needs its demand will rise with a fall in its price & Vice-Versa
New Consumers
When a price of commodity falls a new consumer class appears who can now afford commodity
Types of Demand
Direct Demand
It is the demand by the consumer of goods which satisfy their want directly
Indirect Demand
Dereived demand it reffers to demand for goods which are needed for further production eg demand for workers in sugar factory
Complementary/Joint demand
When 2 or more goods are demanded jointly to satisfy single want it is known as joint complementary want eg car/fuel,pen/refill
Composite Demand
The demand for commodity which can be put to several use is known as composite demand eg electricity is demanded for several uses light/fan/washing machine electricity
Competitive Demand
It is demanded for those goods which are substituted to each other eg Tea/Coffe, Sugar/Jaggery,Rice/Wheat
Determinance of Demand
Price
Consumers prefer to purchase a product in large quantities when price of product is less Vice-Versa
Income
Rise in Income will lead to a rise in demand for a commodity
Prices of subsitute goods
If a subsitute good is available at low price then people will demand cheaper subsitute goods then costly goods
Price of Complementary Goods
Change in price of 1 commodity wood also affect demand for other commodity eg if a price of fuel rises then demand for cars will fall
Nature of product
If a commodity is a neccesity then its demand will continue to be the same irrespective of corresponding price eg electricity, cooking gas
Size of population
The greater the size of population the greater will be demand for commodity
Excepatation about future prices
If the consumer expects the price to fall in future he'll buy less in present at prevailing price
Advertisment
Sales promotion changes preference of consumer & leads to demand for many products eg cosmetic toothbrush etc
Taste habits & fashions
Taste & habits of a consumer influences the demand for commodity
If a consumer likes to eat chocolates he'll demand more of it similarly when the new fashion hits the market the consumer demands that particular type of commodity
Level of taxation
High rates of taxes on goods or services would increase the price & decrease demand for those goods & services
Other Factors
Climatic condition
Changes in Technology
Government Policy
Customs & Fashion Traditions
Law of Demand
Acording to Alfred Marshall other things being equal, higher the price of commodity smaller is the quantity demanded & lower the price of commodity larger is the quantity demanded
Dx = f(Px)
There's an inverse relationship btwn price & demand
Assumptions of the law of Demand
Constant level of income
If there's rise in income people may demand more at given price vice-versa
No change in size of population
Any change in size & composition of population of a country affects total demand for a product
Constant Prices of subsitute goods
Any change in price of substitute goods will affect demand of commodity
Constant prices of complementary goods
It is assumed that prices of complementary goods remain unchanged bcoz of change in the price of one good will affect demand for other
No excepation about future changes in prices
If consumer expectrise in prices in future they may demand more in the present even at existing high price
No change in tastes,habits,preferences,fashion
Any change in these factors will lead to change in demand
No change in Taxation Policy
Taxiation policy of government has a great impact on demand for various goods & services
Excepations to law of demand
Giffen's Paradox
Demand for inferior goods does not rise even if their price falls. At times the demand decreases when the price of such commodities fall
Prestige goods
Expensive goods like diamond gold are status symbol so rich people more of it even when their price is high
Speculation
The law of demand does not hold true when people expect prices to rise till further eg prices of sugar oil tense to rise before diwali so people go on purchasing more as they anticipate more high price rise during diwali
Price illusion
Consumers have an illusion that high priced goods are of a better quality therefore the demand for such goods increase with the rise of prices eg branded products
Ignorance
Sometimes due to ignorance people buy more of a commodity at high prices
Habitual goods
Due to habit of consumption, certain goods like tea & coffee are purchased in required quantites even at a higher price
Variations in Demand
Expansion of Demand
Expansion of Demand refers to rise in quantity demand due to fall in price alone due to other factors like taste income population size remain unchanged
Contraction of Demand
Contraction of Demand refers to fall in demand due to rise in price alone other factor like taste income population size remain unchanged
Changes in Demand
Increase in Demand: When demand increases due to favourable changes in other factors like taste, income,climatic condition etc but price remain constant
Decrease in Demand: When demand decreases due to unfavourable changes in other factors like taste,income,climatic condition etc but price remains constant
Demand Analysis-2
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