What Is Demand Theory?

Demand theory refers to the quantity of a certain product that a consumer (family) is willing and able to purchase at each price level in a specific period. Demand is the unification of purchasing desire and purchasing ability. The table showing the relationship between the price of a certain commodity and the demand is the demand table. The demand curve is drawn according to the demand table, which is a curve showing the relationship between the price of a certain commodity and the demand. The demand curve is inclined to the lower right.

Demand theory

Demand theory refers to the quantity of a certain product that a consumer (family) is willing and able to purchase at each price level in a specific period.

(1) The factors that affect demand include various economic and social factors that affect purchase desire and purchasing ability. These factors are mainly: income, substitutes, consumer preferences and expectations.

(2) The demand for a certain commodity is also related to the prices of other related commodities. Related products are

The demand theorem states that

(1) The change in demand refers to the change in demand caused by changes in the price of the commodity itself under other conditions. Changes in demand are manifested as movements on the same demand curve.

(2) Changes in demand refer to changes in demand caused by changes in other factors when the price of the product itself is unchanged. The change in demand is manifested by the parallel movement of the demand curve.

From the perspective of the demand function, the change in the quantity of demand is the change in the value of the dependent variable caused by the change in the independent variable (P) of the demand function. No matter how it changes, it is within the range of the function. Therefore, the movement of points on the same curve (that is, the demand curve) is represented in the graph. In contrast, changes in demand are changes in the function as a whole due to changes outside the function (exogenous variables). In the example of the demand function, it is expressed as changes in demand caused by factors outside the independent variables of the demand function, such as changes in income and preferences. Thus the entire function seems to change, manifested as a parallel movement of the overall curve.