Types of Demand

Demand is not a single, uniform idea — the Maharashtra HSC Economics syllabus distinguishes several types of demand, based on different bases of classification.

On the basis of the number of buyers:

• Individual demand — the quantity of a commodity a single consumer is willing and able to buy at a given price during a given time period.
• Market demand — the total quantity of a commodity demanded by all the buyers in a market, at a given price during a given period; it is the sum of all individual demands.

On the basis of the number of goods used to satisfy a want:

• Direct demand — demand for a good or service to satisfy a want directly, for its own sake (demand for food, clothing, a haircut).
• Derived demand — demand for a good that arises only because it is needed to produce or use some other good — demand for cotton yarn is derived from the demand for cotton cloth; demand for a machine tool is derived from the demand for whatever it manufactures.
• Joint demand — demand for two or more goods that are used together to satisfy a single want, so that demand for one automatically implies demand for the other (a car and petrol, a pen and ink, bread and butter).
• Composite demand — demand for a single good that arises from several different uses simultaneously — electricity is demanded for lighting, cooking and running machinery all at once, and a rise in demand for any one use raises the total demand for the good.

On the basis of relationship between commodities (cross demand): demand for one good can rise or fall because of a change in the price of a different, related good. If X and Y are substitutes (tea and coffee), a rise in the price of Y raises demand for X. If X and Y are complements (car and petrol), a rise in the price of Y lowers demand for X. …