TYPES OF DEMAND

See the types of demand:

JOINT OR COMPLEMENTARY DEMAND

This is the type of demand where two commodities are jointly demanded E.g. car and petrol, Tea and sugar. The demand for one necessitates the demand for the other.

DERIVED DEMAND

This occurs when the demand for one commodity is wanted as a result of another commodity. E.g. Palm oil is used in the production of soap; therefore palm oil is derived from the demand for soap.

COMPOSITE DEMAND

This is when one commodity can be used for two or more purposes. But the demand for such commodities may vary as a result of a change in the demand for one of the purposes E.g. leather can be used in making shoes, football, traveling bags, belts etc. In this case, an increase in the demand for shoes will automatically lead to increase in the demand for leather as raw materials.

COMPETITIVE DEMAND

This is the type of demand where two commodities are close substitute for the other. In this type of demand1 an increase in the demand for one will lead to a decrease in the demand for the other the increase demand for tea and meat will lead to decrease in demand for margarine, coffee and fish respectively.

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