Unit-2 Demand Analysis, Demand Schedule POE | BBA First Year

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 Definition Demand Analysis, Demand Schedule

• Demand analysis is a research conducted to estimate or find out customer demand for a product or service in a particular market. Sales forecasting, pricing products/services, marketing and advertising expenses, manufacturing Demand analysis is one of the important considerations for various business decisions like sales, expansion planning, etc. Demand analysis covers both prospective and retrospective analysis so that they can analyze demand better and also understand the past success and failure of the product/service.·       
•   For a new company, demand analysis can help decide whether sufficient demand exists for the product/service and looking at other information such as number of competitors, size of competitors, industry growth, etc. whether the company can enter the market and produce. Adequate returns to sustain and grow your business.
  

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Demand Schedule       

• The law of demand states that when the price of a good falls, its demand increases and when the price of a good rises, its demand decreases; Other things will remain constant. Thus, an inverse relationship exists between the price of a good and the quantity demanded. The functional relationship between price and quantity demanded can be represented as Dx = f(Px).

 Type of Demand Schedule     

• It is a statement in the form of a table showing different quantities of demand at different prices. There are two types of demand schedules:

1. Individual Demand Schedule 
2. Market Demand Schedule

Individual Demand Schedule    

• It is a demand schedule that shows the demand of an individual customer for a good in relation to its price. Let us study this with the help of an example

•  The above schedule represents the individual demand schedule. We can see that when the price of the commodity is 100, its demand is 50 units. Similarly, when its price is €500, its demand decreases to 10 units. ·        
• Thus, we can conclude that as price falls demand increases and as price rises demand decreases. Therefore, an inverse relationship exists between the price and quantity demanded.

Individual Demand Curve      

•   It is a graphical representation of the individual demand schedule. The x-axis represents demand and represents the price of an item.

•  The above demand curve shows the demand for gasoline. When the price of gasoline is $3.5 per liter, its demand is 50 liters and when the price is $0.5 per liter, the demand is 250 liters.

Market Demand Schedule       

•    It is the sum of individual demand schedules and shows the demand of different customers for a good in relation to its price. Let us study this with the help of an example.

•  The above schedule shows the market demand commodity X. When the price of the commodity is ®100, customer A demands 50 units while the customer B demands 70 units.       
• Thus, the market demand is 120 units. Similarly, when its price is Rs 500, customer A demands 20 units while customer B demands 30 units. ·        
• Thus, its market demand decreases to 40 units. Thus, we can conclude that whether it is individual demand or market demand, the law of demand governs both.Market Demand Curve ·       
•   It is a graphical representation of the market demand schedule. The X-axis represents the market demand in units and the Y-axis represents the price of a commodity.

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