Demand and supply

1. Introduction to demand

DEMAND 
APPLY CONCEPT OF DEMAND IN MARKET ANALYSIS
INTRODUCTION 
Price theory is concerned with the determination of price of any commodity. 
Price is determined at that level where demand for and supply of any commodity are equal to each other. 
In economics, by demand we mean the quantity which the consumer stands ready to buy at varying prices, where all other conditions are constant. 
These conditions are: — 
Income of the consumers 
Taste and preferences of the consumer, and 
Prices of substitute commodities. 
We may distinguish between demand, desire and need. 
A person desires to have a radio set but it is not his demand unless he has purchasing power. Similarly, a sick person needs a tonic. But it is not his demand unless he purchases. 
Demand is the function of the price of any commodity. 
It varies with the variation in price. 
The relation between price and demand can be explained by the help of the LAW OF DEMAND. 
The law of demand says that demand changes inversely with the price.
 It means if the price falls, then demand will increase and vice-versa. 
The Law of Demand may be defined in the words of Alfred Marshall as: — 
"OTHER THINGS BEING EQUAL, WITH A FALL IN PRICE, THE DEMAND FOR THE COMMODITY IS EXTENDED AND WITH A RISE IN THE PRICE, THE DEMAND IS CONTRACTED".