DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : K.DORASWAMY
Designation : Lecturer in CCP
Institute : Govt. Poly. for Women,
Kakinada
Semester : V Semester
Subject : Business Economics
Subject Code : CCP-502
Duration : 50minutes
Major topic : Consumer Behaviour
Sub Topic : Types of Demand.. Contd
Teaching Aids : PowerPoint, Animations

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Objectives

On completion of this period, you would be

able to
 Define Autonomous Demand
 Define Derived Demand
 Short Run Demand
 Long run Demand

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Recap

We have so far discussed --

 Demand
 Individual, Market, Company and Industry Demand

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Derived Demand

 When a demand for a product depend on the demand of

some parent product, Its demand is called derived
demand
Ex:The demand for cement is linked with building
activity
 If construction activity increases the demand for cement
increases

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 In the real word it is hard to find the product whose
demand is completely independent

 Derived demand is less price elastic

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 A given change in its price may result in less than
proportionate change in its demand

Ex: A 10% change in the price of cement may result

only 1% change in the demand of building
activity,because the prices of other products may
remain same

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Derived demand facilitates forecasting:

 If the production between the parent product and

the dependent product are fixed - It is easy to
forecast demand with accuracy

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 If the proportions are not fixed it is rather difficult to
determine the derived demand
Ex: Cotton textile industry and looms

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 Growth of cotton textile industry will increase the
demand for looms
 It is difficult to forecast exactly the extent of
increase in the demand for looms
 The looms may be used in double or triple shifts
 If the uses, which a product can be put, change

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Autonomous Demand

 When the demand for some products inter-related

or depends to the demand for a particualar parent
product this demand is called autonomous
demand.
Ex: demand for construction industry related to
demand for cement, iron, steel, brick, sand etc

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Short Run Demand

 It is the existing demand which reacts immediately

to changes in prices incomes etc.

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Long Run Demand

 It refers to the the demand that will ultimately exist in

the market after enough time is allowed for the
market to adjust itself to the new situation.
Ex: If electricity rates are reduced existing users of
electrical appliances like stoves etc use more – in
the short run

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 In the long run, more and more people may buy
electrical appliances and the demand for
electricity may be more than what it is in the short
run.

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Summary
We have so far discussed
 Autonomous Demand
 Derived Demand
 Short Run demand
 Long Run Demand

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Frequently Asked Questions

1. Define Derived Demand

2. Define Autonomous Demand
3. What is short run demand?
4. What is long run demand?

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