A Industry demand and Firm Company demand PDF

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Summary

The document differentiates the industry demand and firm company demand. Examples are also provided in the document....

Description

a) Industry demand and Firm (Company) demand, Industry demand has reference to the total demand for the products of a particular industry, e.g. the demand for textiles. Company demand has reference to the demand for the product of a particular company which is a part of that industry, e.g., the demand for textiles produced by the XYZ. The company demand may be expressed as a percentage of industry demand. The percentage so calculated would indicate the market share of the company. Monopoly is that market category in which there is only a single seller and therefore there is no difference between a firm and an industry. The firm is itself an industry and therefore the demand curve of the individual firm as well as the industry demand curve under monopoly will be the same and as we shall see later is downward sloping. The demand curve for an individual firm is horizontal- this is because consumers cannot differentiate between firms, thus firms are price takers. The demand curve for the industry is a normal downward sloping curve (unless it's a specific market with a different demand- Veblen goods, etc.)

b) Short-run demand and Long run demand In economics, demand is the desire to own anything, the ability to pay for it, and the willingness to pay. The term demand signifies the ability or the willingness to buy a particular commodity at a given point of time. Short run is defined as a period where adjustments to changed conditions are only partial, e.g.; if defined for the product for a firm increases, in the short run it can meet the increased demand through changes in man-hours and intensive use of existing machinery, but it cannot increase its production capacity. Long-run is a period where adjustment to changed circumstances is complete. For example, the above mentioned firm can meet the increased demand in the long-run by making changes in its production capacity or by setting up an additional plant, besides changes in man-hours and intensive use of its existing machinery. Because of the stickiness of resources in the short run, in the short run there can be imbalances in supply and demand. Areas in which there is increased demand may encounter shortages until resources can be

shifted to it and likewise areas of decreasing demand can see excess supply. The long run is assumed to have no imbalances of this sort.

c) Durable goods’ demand and Non-durable goods demand.

Durable Goods      

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Goods that go on yielding services to the consumers over a number of periods in future. Further, because of their durability they can be stored for longer periods of time. Durable goods tend to have a long useful life. For statistical purposes, a durable good is expected to last at least three years, according to the Economics and Statistics Administration Consumer durable goods include items like furniture, jewelry and cars. Large appliances such as stoves and washing machines are durable goods. Durable goods can be used many number of times Durable goods can be resold after some years The significance of changes in durable goods production and sales is more complex. Durable goods are usually more expensive than non-durable goods that have to be purchased over and over again.

Non-Durable Goods   

Goods are those which wear out easily and therefore they can be used for short period of time only. Nondurable products can used for only limited number of times in some cases only once. The market for some non-durable goods, such as food, tends to be stable...