Consumer behaviour and demand

Supply means the quantities that a seller is willing and able to sell at different prices . It is obvious that if the price goes up, he will offer more for sale. But if the price goes down, he will be reluctant to sell and will offer to sell less. Supply thus varies with price. Just as we cannot speak of demand without reference to price and time, similarly we cannot speak of supply without reference to price and time. Supply is always at a price. The supply of any good may then be defined “as a schedule of respective quantities of the good which  people are ready to offer for sale at all possible prices”. Supply schedule: Individual Supply Schedule The supply schedule depicts the list of quantities—price relationships of a commodity in a market at a specific point of time by an individual seller. In other words, it reveals the mind of sellers in offering various quantities of a given commodity against corresponding prices. Market supply It is the sum of the quantity of a commodity tha

The law of demand explains the functional relationship between the quantity demanded of a commodity and its unit price , i.e., a rise in the price of a commodity or service is followed by a reduction in the quantity demanded, and a fall in the price is followed by an extension in demand, with other conditions remaining the same. Exceptions to the law of Demand Following are the exceptional cases, where, the law of demand does not hold good. 1. Giffen Goods (Inferior Goods): This phenomenon which is explained below was given by Sir Robert  Giffen. It was named after him as the Giffen paradox. This phenomenon says that a rise in price is followed by an extension of demand, while a fall in price is followed by a reduction in demand for the good. 2. Prestigious Goods: When the possession of a good brings in social distinction, the consumer would go for the same even if its price is higher. An example to be cited here is the diamonds that the rich people purchase, as the possession of t

 The various quantities of a given commodity or service which consumers would buy in one market in a given period of time at various prices, or at various incomes, or at various prices of related goods. Individual Demand Schedule The various quantities of a commodity that a consumer would be willing to purchase at all possible prices in a given market at a given point in time, other things being equal is called individual demand. An individual demand schedule is merely a list of prices together with the quantities that will be purchased by a consumer. It is a pairing of quantity and price relationship. At Rs. 20, the consumer will purchase 0.25 kg, at Rs. 16, 0.50 kg, and at Rs. 12, 0.75 kg and so on. As the price of the commodity decreases the quantity demanded will increase. Market Demand Market demand is the sum of the demand of all the consumers in a market for a given commodity at a specific point in time. Assume that in a market there are only three consumers, viz., A, B, and C,