1.2.1.6 Types of demand

In economics, demand can be categorized into various types based on different characteristics and conditions. Understanding the different types of demand helps in analyzing market behavior and making informed decisions. Here are some common types of demand:

Individual Demand: Individual demand refers to the quantity of a good or service that a single consumer is willing and able to buy at various price levels. It focuses on the preferences, income, and buying behavior of a specific individual.
Market Demand: Market demand, also known as aggregate demand, is the total quantity of a good or service that all consumers in the market are willing and able to buy at various price levels. It is the summation of individual demands in the market.
Derived Demand: Derived demand refers to the demand for a particular good or service that arises from the demand for another related good or service. It occurs when the demand for one product depends on the demand for a complementary or supporting product. For example, the demand for steel is derived from the demand for automobiles and construction.
Autonomous Demand: Autonomous demand is the demand for a good or service that exists independently and is not affected by the demand for other products. It is the opposite of derived demand.
Composite Demand: Composite demand occurs when a good or service is demanded for multiple purposes. For example, electricity is demanded for both residential and industrial purposes.
Competitive Demand: Competitive demand refers to the demand for two or more goods that can serve as substitutes for each other. An increase in the price of one good leads to an increase in the demand for its substitutes.
Joint Demand: Joint demand refers to the demand for two or more goods that are used together, typically as complementary goods. An increase in the demand for one good leads to an increase in the demand for its complements.
Effective Demand: Effective demand is the quantity of a good or service that consumers are both willing and able to buy at a given price level. It takes into account consumers’ preferences and their purchasing power.
Excess Demand (Shortage): Excess demand, also known as a shortage, occurs when the quantity demanded exceeds the quantity supplied at a given price level. It leads to upward pressure on prices.
Excess Supply (Surplus): Excess supply, also known as a surplus, occurs when the quantity supplied exceeds the quantity demanded at a given price level. It leads to downward pressure on prices.