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Understanding The Concept Of Demand Part 2 (for UPSC CSE)
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This lesson is in continuation of the previous lesson. It discusses more variables affecting the shift in the demand curve. It also throws light on the exceptions to the Law of Demand such as in the case of Giffen goods, Natural calamities, an anticipation of process etc. along with examples.

Ayussh Sanghi is teaching live on Unacademy Plus

Ayussh Sanghi
Passionate Educator - CSE / Other Govt Exams [Peep into my Unacademy Plus Courses & experience awesome learning.]

Unacademy user
1-d, 2-c, 3-c, 4-a, 5-c
more than educative....enlightening indeed!!!. .thank you sir.
Sir, I have small query : "Expectation is a variable affecting shift" and "Anticipation of price is exception to the law of demands" but these two looks similar to me. Would you please give me differences between these two.?? Similarly, Natural calamities are exceptions to law of demand and Giffen goods are also mostly related to the natural calamities. Would you please explain the difference between these two also.? Thanks
Kratika Dixit
2 years ago
I also have the same query..plz smone rply
Ajeet Sarkaria
a year ago
Expectation point is in context with the bonus or increment one going to get hence, in this case, they will wait for the money to get credited in their account and wouldn't go for purchasing before its credited While in Antici[pation is in context with the shares- marketing terms. If a share is going up & up more people will be interested to buy But when it's going down sharply more will sell out hence making it in the exception. E.g. Bitcoin trading.
Ajeet Sarkaria
a year ago
talking about the Giffen goods, bitcoin trading is a good example and these come under when society is in order (rules & regulation are being followed). While in natural calamities there are no rules applicable. You might have seen even crimes happen during these events, so there is no order in the society and thing may get erratic.
Sir, how micro economy is useful in identifying why some people are poor, why there is poverty?
Are complementary goods the ones where increase in the price of one leads to increase in demand of other or decrease(as mentioned in video)?
Chaitanya Garg
2 years ago
Yes, you are right. But then the given definition of complementary gods and substitute goods will become same, but they are different concept.
Moosa Iqbal
2 years ago
Complementary goods are those in which change in price of one good will cause a change in demand of other good. For example : petrol and car: if price of petrol increases, demand of car will go down because people will not less cars. similarly , coffee and sugar: if sugar price increase, demand of coffee will decrease.
Gursewak fateh
2 years ago
good , I also realized that there is mismatched something,
I would like to suggest another exception to the law of demand. It is the conspicuous consumption. For example: the demand for precious stones like diamond. Only the rich and elite can afford to buy them. They buy diamonds as a symbol of prestige. If the price of diamonds fall, then even the commoners can afford them. It will no longer be a symbol of prestige. So, its demand will fall, on fall in prices.
Manav Chawla
3 years ago
these are actually called Articles of distinction.. and yes it is a valid example
  1. INTRODUCTION TO INDIAN ECONOMY 1.6 CONCEPT OF DEMAND PRESENTED BY AYUSSH SANGHI


  2. ABOUT ME Passionate about Teaching >Taught at most reputed Civil Services Institutes >CA, Lawyer Follow me on: https://unacademy.in/user/ AyusshSanghi


  3. VARIABLES AFFECTING SHIFT IN DEMAND CURVE Substitute Goods: Two goods for which increase in the price of one leads to an increase in the demand for the other. Example: Tea and Coffee. If the price of Coffee rises, then people will demand less and less of Coffee and the demand for its nearest substitute i.e. Tea will increase. This will shift the demand curve for Tea to the right.


  4. VARIABLES AFFECTING SHIFT IN DEMAND CURVE Complementary Goods: Two goods for which an increase in the price of one leads to a decrease in the demand for the other. Example: If the price of coffee falls, according to the law of demand, people will buy more coffee. Yet in this case the demand for sugar will also increase because coffee and sugar is used together. Similarly with petrol and car and computers and software.


  5. VARIABLES AFFECTING SHIFT IN DEMAND CURVE Taste & Preference: One of the most important determinant of demand is the taste of an individual. If an individual likes ice cream, then he will buy more of it. Thus, change in taste shifts the demand curve as well


  6. VARIABLES AFFECTING SHIFT IN DEMAND CURVE o Expectation: Expectations about the future may affect the demand for a good or service today. Example: If one expects to earn a higher income next month, one may choose to save less now and spend more of current income on buying some goods.


  7. VARIABLES AFFECTING SHIFT IN DEMAND CURVE o Number of Buyers: Since market demand is derived from individual demands, it depends on all those factors that influence individual demand (the factors mentioned above) In addition, it also depends on number of buyers o Example: If A, another consumer of ice cream was to join B and C, the quantity demanded in the market would be higher at every price, and the demand curve would shift to the right.


  8. EXCEPTION TO THE LAW OF DEMAND Giffen Goods: Those goods that do not comply with the law of demand. It is a good for which demand increases as the price increases, and falls when the price decreases.


  9. EXCEPTION TO THE LAW OF DEMAND A Giffen good has an upward-sloping demand curve, which is contrary to the fundamental law of demand, which states that quantity demanded for a product falls as the price increases, resulting in a downward slope for the demand curve. A Giffen good is typically an inferior product that does not have easily available substitutes.


  10. EXCEPTION TO THE LAW OF DEMAND o Example: Giffen good is related to Irish potato famine in th the 19 century During the famine, as the price of potatoes rose, impoverished consumers had little money left for nutritious but expensive food items like meat (the income effect). So even though they would have preferred to buy more meat and fewer potatoes (the substitution effect), the lack of money led them to buy more potatoes and less meat. more