# Economics

Pages: 5 (1021 words) Published: September 23, 2010
ECONOMICS PROJECT
PHASE – I
DEMAND ANALYSIS
HIMALAYA NEEM FACE WASH

Submitted to: Ms. Geeta Jaglan
&
Kriti Puri
Section: E
1ST SEM.
AIBS
AMITY UNIVERSITY
CONTENTS

1.Basic Introduction……………………………………………………………………….3 2.Price Elasticity of the Product……………….…………………………………………..8 3.Analysis of the Product………………………………………………………………….10 4.Conclusion……………………………………………………………………………….11

BASIC INTRODUCTION

DEMAND
The amount of a particular economic goods or service that a consumer or group of consumers will want to purchase at a given price. In simple words, it refers to how much (quantity) of a product or service is desired by buyers (Consumers) Example: A person wants an LAPTOP and he has \$700 to spend on it. He is ready to spare \$700 and so he has created a demand for that product which the market should supply.

SUPPLY
The total amount of goods or service available for purchase depending on the demand is called supply. In other words, it represents how much a market can offer for the product demanded. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price.

DEMAND CURVE
The demand curve shows the amount that consumers are willing to buy given a particular market price. It is the graphical representation of a demand schedule.

For example:
A Demand schedule of a Particular product is as follows:
PRICE54321
QTY.
DEMANDED1017265375

The Demand Curve will be

The demand curve is usually downward sloping, since consumers will want to buy more as price decreases. Demand for a good or service is determined by many different factors other than price, such as the price of substitute goods and complementary goods. In extreme cases, demand may be completely unrelated to price, or nearly infinite at a given price. Along with supply, demand is one of the two key determinants of the market price.

FACTORS DETERMINING THE DEMAND of the PRODUCT
Some factors that determine the demand for a product:
Price of Product and its substitutes
Consumer’s income
Consumer’s taste and preferences
Consumer’s Future expectations
Population of a country and its credit facility

ELASTICITY of DEMAND
The Degree of responsiveness of demand to the change in its determinants is called Elasticity of Demand In simple, elasticity is the ratio of the percent change in one variable to the percent change in another variable. This concept plays an important role in business-decisions regarding manoeuvring of prices with a view to making larger profits.

PRICE ELASTICITY of DEMAND
Generally it is defined as the responsiveness or sensitiveness of demand for a commodity to the changes in its price. More precisely, elasticity of demand is the percentage change in demand as a result of one percent change in the price of commodity. Price elasticity (ep) is given by

Mathematically, definition of elasticity is given by

Where
Qd = Original Quantity demanded
P = Original price
∆Q = Change in quantity demanded
∆P = Change in price.

PRICE ELASTICITY AND TOTAL REVENUE
Price and total revenue are related as follows:
Total Revenue = Price × Quantity
There may be 3 kinds of price elasticity
a). Less than unit elastic (ep1)
In this situation, change in quantity demanded is greater than the proportionate change in price. Therefore total revenue increases as price falls and vice versa.

An increase in price would result in an increase in revenue, and a decrease in price would result in a decrease in revenue. In the extreme case of elasticity near 0, the demand curve would be nearly vertical, and the quantity demanded would be almost independent of price. The case of zero elasticity is described as being perfectly inelastic.

PRICE ELASTICITY of the PRODUCT

PRODUCT TAKEN
Himalaya Purifying Neem Face Wash 100ml.
One of the most prominent product of The Himalaya...