Unit II: Theory of Consumer Demand

Demand theory is an economic principle relating to the relationship between consumer demand for goods and services and their prices in the market.

Demand theory forms the basis for the demand curve, which relates consumer desire to the amount of goods available. As more of a good or service is available, demand drops and so does the equilibrium price.

In this “Theory of Consumer Demand - Applied Economics” you will learn about following topics:

Ordinal Approach (Indifference Curve Analysis)
Meaning of Indifference Curve
Properties of Indifference Curve
Consumers Equilibrium
Changes in Consumer’s Equilibrium
Price Effect
Income Effect
Substitution Effect
Decomposition of Price Effect into Income and Substitution Effect
Decomposition Of The Price Effect Into Income And Substitution Effects With A Fall In The Price Of Normal Goods Under Hicksian Approach
Demand and Demand Function
Price Elasticity of Demand (Ep)
Types (Degree) of Price Elasticity of Demand
Determinants of Price Elasticity of Demand
Income Elasticity of Demand (Ey)
Types of Income Elasticity of Demand
Cross Elasticity of Demand (E_C)
Types Of Cross Elasticity of Demand
Supply and Supply Function
Price Elasticity of Supply
Degrees or Types of Price Elasticity of Supply
Economics of Speculation

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