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SS2: ECONOMICS - 1ST TERM

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  1. Basic Tools for Economic Analysis I | Week 1
    5 Topics
  2. Basic Tools for Economic Analysis II | Week 2
    3 Topics
    |
    1 Quiz
  3. Theory of Demand | Week 3
    4 Topics
    |
    1 Quiz
  4. Theory of Supply | Week 4
    4 Topics
    |
    1 Quiz
  5. Theory of Production Possibility Curve I | Week 5
    1 Topic
  6. Theory of Production Possibility Curve II | Week 6
    4 Topics
    |
    1 Quiz
  7. Theory of Cost I | Week 7
    2 Topics
  8. Theory of Cost II | Week 8
    3 Topics
    |
    1 Quiz
  9. Revenue Concept | Week 9
    2 Topics
    |
    1 Quiz



Lesson 3, Topic 4
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Change in Quantity Demanded & Change in Demand

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Topic Content:

  • Change in Quantity Demanded
  • Change in Demand
    • Decrease in Demand
    • Increase in Demand

Change in Quantity Demanded:

A change in quantity demanded is the variation of the quantity of any commodity due to fluctuation in price. It means buying more/less of any commodity as price changes.

It is a movement from one particular point on the demand curve, to another point on the same demand curve. Such a change in quantity is a reaction to a change in price alone, for example, the movement from one point to another for an increase in quantity; all these movements are along the same curve.

All these can happen if the consumer purchases more goods when his income is high, which means that an individual purchases more when his income increases.  

A change in quantity demanded shows a movement along the demand curve.

Movement along the demand curve means an extension or contraction of demand. Extension of demand is when more is bought at a lower price, while contraction of demand is when less is bought at a higher price. The only factor that causes changes in quantity demanded is the price of the commodity, with all other factors being held constant. This is shown in a diagram thus;

changes in quantity demanded

 

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Evaluation Questions:

1. Explain the movement along the demand curve.

Answer:

Movement along the demand curve: This is referred to as a change in quantity demanded. There are two types of movement along the demand curve namely:

a. Downward or Negative movement: This indicates a decrease in demand due to fall in price (extension in demand)

b. Upward or Positive movement: This indicates a decrease in demand as a  result of rise in price i.e. contraction of demand.

 

2. Distinguish between the following types of demand

i. Joint demand and Derived demand

Answer:

Joint demand: This is the demand for two or more commodities that are used or demanded together. For example, demand for cars leads to demand for petrol, etc.

Derived demand: This is the demand for a commodity not for its sake but for the sake of what it provides. It is an indirect demand for the main commodity. It is also demand for factors of production

ii. Composite Demand and Competitive demand.

Answer:

Composite Demand: This refers to the demand for a commodity, which serves different purposes to different people e.g. flour may be demanded for baking bread, cake, meat pie, etc.

While competitive demand refers to the demand for two or more commodities that serve as close substitutes or alternatives to one another e.g. fish and meat, blue band butter and margarine, etc.