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TYPES OF DEMAND

Updated on March 9, 2011

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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      Atta sale 3 months ago

      Good explanation

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      Antony kariuki 3 months ago

      great explanation it couldn't

      have been made any simpler.

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      Jabir 5 months ago

      Thanks

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      Paul 9 months ago

      Thanks very much i nw understand the types of demand

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      favourite 9 months ago

      Thanks a lot.

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      shallom 16 months ago

      It is indeed self explanatory, tanks alot

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      rabi 17 months ago

      Wow good explaination n understanding

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      Olasunkanmi 17 months ago

      Dat Gud

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      halimat sadiya musa 18 months ago

      definitely I relay understand that,thanks a lot.

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      Edna 18 months ago

      Thank you very much very educative

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      gitari naxhon 18 months ago

      thanks very much for the service .

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      Adam sabo sagagi 18 months ago

      Thank i undastand now

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      babalola taofeek 18 months ago

      tanks i understand nw

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      Tijjani wangara 18 months ago

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

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      Usman (Lipsey) 21 months ago

      Thanks you made me well understood.

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      Usman (Lipsey) 21 months ago

      Thanks you made me well understood.

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      Prince thankgod 21 months ago

      How many types of demand do we have

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      mohammed asmin said 21 months ago

      tx well explained ooooh, keep it up!~!!!!

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      Jeremiah 21 months ago

      I like dis keep itup thanks Add Your Comment...

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      Priscilla 22 months ago

      good good job.

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      Thanks....y0u've really helped al0t 0f pe0ple....keep it up!

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      Muntasir And kabiru 22 months ago

      I really appreciate you for providing this types.

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      Victtoro Jr 22 months ago

      Thanks. This is all the better explanation I needed.

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      DO ME 23 months ago

      dats c a nyc explanation it has helped me

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      francis ayindago 23 months ago

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

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      Emmanuella 2 years ago

      This has really helped me in my project.

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      blessing 2 years ago

      ...thanks for the idea you created in me.

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      sophia 2 years ago

      thank you for your help that is great and nice I love that

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      Isha jalloh 2 years ago

      wonderful explanation

    • profile image

      Isha jalloh 2 years ago

      wonderful explanation

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      Angela Gaitho 2 years ago

      Dats so excellent May God bless u

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      witty 2 years ago

      Tanx for ur good explanation it really helped me

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      d-klitZ 2 years ago

      thanks for more explanation on .demand nd supply

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      Kpelai derek 2 years ago

      Thanks For the comprehensive types of demands and explanation.

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      Kpelai derek 2 years ago

      Thanks For the comprehensive types of demands and explanation.

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      sayilnen Ngas 2 years ago

      thx a lot,i fund it very useful,i now understand

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      Upright koke 2 years ago

      Thnx, is very short n clear. Pick it up. God bless u

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      Jennifer 2 years ago

      thanks nice one, now i understand the types of demand

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      patience 2 years ago

      Thank for ur understanding.

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      bygone 2 years ago

      Is a good ideal

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      Damilola 2 years ago

      I also thank u very much please keep it up, now I understand it soooo much

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      Sakwe nabamba 2 years ago

      Add Your Comment..well elaborated

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      Otuan Esther 2 years ago

      Thanks. Its very understandable. I enjoyed it. Keep it up.

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      towett Dickson 2 years ago

      thanks for clarification

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      joy 2 years ago

      Clearly explained.Thanks

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      mike g 2 years ago

      Comprehensive explanations tanx a lot

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      shaheen alom 3 years ago

      thnxx lot

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      Josephine Quartey 3 years ago

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

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      Elume Ebou David 3 years ago

      Thanks for the knowledge, wisdom and understanding may the almighty God continue to impact you with more!

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      philip 3 years ago

      Thanks for explaning it to my understanding

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      kayongo joseph 3 years ago

      Thx a lot

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      rishav 3 years ago

      quite helpful for my project . Thank you

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      SYLVESTER NWEKE 3 years ago

      THANKS FOR YOU EXPLANATION

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      Jonny 3 years ago

      Wonderful explanation!

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      Temmy 3 years ago

      Ds i̶̲̥̅̊s so explanatory! God bless u

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      stephen 3 years ago

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

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      Evance Gozibert 3 years ago

      Wonderful, my teacher failed to do this.

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      swati 3 years ago

      thanks for providing help

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      philomina 3 years ago

      Thanks for providing this services.

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      Kamilu sanusi 3 years ago

      I understand the type of demand, thanks you.

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      aneth 4 years ago

      weldone it is nice to read i understood.

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      nadia zuberi 4 years ago

      its fantastic keep it upand continue writing so many other articles like this

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      MORRIS 4 years ago

      ITS A NICE ONE

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      Faith .i. 4 years ago

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

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      kennedy 4 years ago

      this is good,it has helped me a lot.thanx

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      Chrisagbe 5 years ago

      Thanks Sharon for taking time to read

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      Sharon 5 years ago

      This is a nice explanation,keep it up.