TYPES OF DEMAND AND SUPPLY
TYPES OF DEMAND
- COMPLEMENTARY (JOINT) DEMAND: This is the demand that occurs when two or more goods are needed or required together at the same time by a consumer, eg tea and sugar, car and petrol. Increase in the demand for car will lead to increase in demand for petrol, vice-versa.
- COMPETITIVE (SUBSTITUTE) DEMAND: This is the demand that occurs when two goods are close substitute and serve the same purpose. In this case, when there is an increase in the price of one commodity that has close substitute to another, its demand will fall as consumers will shift to the other close substitute goods with lower price and the demand for the close substitute goods will increase, eg fish and meat, tea and coffee, butter and margarine, pen and biro.
- COMPOSITE DEMAND: This is the demand that occurs when the total demand for a single commodity will serve many useful purposes. For example, cocoa beans is demanded for making cocoa beverages, cocoa bread, cocoa wine and chocolate. Cassava is demanded for making foofoo, garri, starch and cassava powder (Elubo)
- DERIVED DEMAND: This is the demand that occurs when the demand for a commodity is not for its immediate consumption but for the demand for another commodity. For example, there is a demand (derived) for flour to satisfy the demand for bread and cake.
TYPES OF SUPPLY
- COMPLEMENTARY (JOINT) SUPPLY: This supply occurs when two or more commodities are produced and supplied from one source. An increase in the production and supply of one will automatically bring about increase in the production and supply of the other commodities that are produced from the same source, eg an increase in production and supply of petrol from petroleum (crude oil) can lead also to an increase in supply of kerosene and other products from crude oil.
- COMPETITVE (SUBSTITUTE) SUPPLY: This supply occurs when many commodities are supplied for the satisfaction of a particular want. In other words, it is the supply of two or more commodities that serves as substitute or alternative to one another, eg meat and fish, omo blue detergent and elephant blue detergent, margarine and butter.
- COMPOSITE SUPPLY: This supply occurs when a certain commodity can serve two or more purposes. In other words, the supply of the commodity for one purpose will greatly affect the supply of the same commodity for another purpose, eg flour for production of doughnut will greatly affect the production of cake, cassava for the production of starch will greatly affect the production of garri.