(a) What is a demand schedule? (b) State the law of demand. (c) Using appropriate examples, explain the following types of demand: (i) Competitive demand (i...
Question 1 Report
(a) What is a demand schedule?
(b) State the law of demand.
(c) Using appropriate examples, explain the following types of demand:
(i) Competitive demand
(ii) Derived demand
(iii) Joint demand
(iv) Composite demand
Answer Details
(a) A demand schedule is a table showing the different quantities of a commodity that consumers are willing and able to buy at various prices over a given period, other things remaining equal.
(b) The law of demand states that, other things being equal, the higher the price of a commodity the lower the quantity demanded, and the lower the price the higher the quantity demanded. Price and quantity demanded move in opposite directions.
(c) Types of demand:
- Competitive demand: demand for goods that are substitutes, so that buying more of one means buying less of the other. Example: butter and margarine.
- Derived demand: demand for a good that arises not for its own sake but because it is needed to produce or enjoy another good. Example: demand for bricklayers is derived from the demand for houses.
- Joint (complementary) demand: demand for goods that are used together, so that a rise in demand for one raises demand for the other. Example: cars and petrol; pen and ink.
- Composite demand: demand for a good that has several different uses, the total demand being the sum of the demands for each use. Example: demand for water for drinking, washing, irrigation and industry.
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