TYPES OF DEMAND

There are four types of demand namely Competitive Demand, Joint or Complementary Demand, Composite Demand and Derived Demand. Demand is the amount of a product buyers are willing and able to purchase at a given price over a particular period of time.

a. Competitive Demand

Commodities are substitutes if one can be used in place of the other. Substitute goods serve the same purpose and therefore compete for the consumers’ income. They are said to have competitive demand because of the fact that they compete for the consumers’ income. Examples of substitute goods are Milo and bournvita, butter and margarine and others. A change in the price of one affects the demand for the other. If for instance there is an increase in the price of butter, demand for margarine will increase which will ultimately increase the price of margarine, provided the supply of margarine does not change. On the other hand a decrease in the price of butter will lead to a decrease in the demand for margarine, and hence a fall in its price, given the supply.

b. Joint or Complementary Demand

Two or more goods are said to be jointly demanded when they must be consumed together to provided a given level of satisfaction. Some examples are cars and fuel, compact disc players and CD. There are perfect complementary goods and imperfect or poor complementary goods. For perfect complementary goods, the consumer practically cannot do without the other. An example is cars and fuel. On the other hand, for imperfect complementary goods, a consumer can do without the other, so long as a substitute is obtained. For complementary demand, a change in the price of one good affects the demand for the other. If there should be an increase in the price of compact disc players, there will be a decrease in the demand for discs, other things being equal.

c. Derived Demand

When the demand for a commodity is derived from the demand for the final commodity, that commodity is said to have derived demand. Wood may be demanded for the purpose of manufacturing furniture and not for its own sake. Here, the demand for wood is derived from the demand for furniture. Demand for wood is therefore a derived demand.

Factors of production such as land, labor, and capital have derived demand. This is because an increase in the demand for a commodity will result in an increase in the factors of production used in producing the goods. The price of the factors of production will increase, other things being equal.

d. Composite Demand

Composite demand applies to commodities which have several uses or are demanded for several and different purposes. Wood as mentioned in the example above is used for furniture – tables, chairs, beds, windows, doors and others. A change in demand for one of them will affect all others. If there is an increase in demand for table this will result in higher prices being paid for wood. The high price for wood will increase the cost of production of chairs, bed, windows and doors and any other thing for which wood is used in manufacturing

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Comments 66 comments

Sharon 4 years ago

This is a nice explanation,keep it up.


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Chrisagbe 4 years ago Author

Thanks Sharon for taking time to read


kennedy 4 years ago

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Faith .i. 3 years ago

It gave me a better understanding about types of demand.thanks on your good work


MORRIS 3 years ago

ITS A NICE ONE


nadia zuberi 3 years ago

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aneth 3 years ago

weldone it is nice to read i understood.


Kamilu sanusi 3 years ago

I understand the type of demand, thanks you.


philomina 2 years ago

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swati 2 years ago

thanks for providing help


Evance Gozibert 2 years ago

Wonderful, my teacher failed to do this.


stephen 2 years ago

in composite demand what if the commodity has no production for many.


Temmy 2 years ago

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Jonny 2 years ago

Wonderful explanation!


SYLVESTER NWEKE 2 years ago

THANKS FOR YOU EXPLANATION


rishav 2 years ago

quite helpful for my project . Thank you


kayongo joseph 2 years ago

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philip 2 years ago

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Elume Ebou David 2 years ago

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Josephine Quartey 2 years ago

Tnx for the explanations n examples cos I got them now.


shaheen alom 2 years ago

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mike g 23 months ago

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joy 23 months ago

Clearly explained.Thanks


towett Dickson 21 months ago

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sayilnen Ngas 18 months ago

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Kpelai derek 18 months ago

Thanks For the comprehensive types of demands and explanation.


Kpelai derek 18 months ago

Thanks For the comprehensive types of demands and explanation.


d-klitZ 18 months ago

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witty 17 months ago

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Angela Gaitho 17 months ago

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Isha jalloh 17 months ago

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Isha jalloh 17 months ago

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blessing 17 months ago

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Emmanuella 16 months ago

This has really helped me in my project.


francis ayindago 15 months ago

it help me alot in teaching demand and supply to my students. tanx a lot


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Victtoro Jr 14 months ago

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Priscilla 13 months ago

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mohammed asmin said 13 months ago

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Prince thankgod 12 months ago

How many types of demand do we have


Usman (Lipsey) 12 months ago

Thanks you made me well understood.


Usman (Lipsey) 12 months ago

Thanks you made me well understood.


Tijjani wangara 10 months ago

i am proverbaly understood, may Allah give opportunity to write mpre than that


babalola taofeek 10 months ago

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Adam sabo sagagi 10 months ago

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Edna 9 months ago

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Olasunkanmi 9 months ago

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rabi 8 months ago

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shallom 8 months ago

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favourite 3 weeks ago

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hammad awan 3 weeks ago

any one who tell me the 5 type of demand


Paul 2 weeks ago

Thanks very much i nw understand the types of demand

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