In a society, every individual engaged in earning their livelihood in a different way. Some people by providing there services and products to others to earning their livelihood. From that, they live and satisfy their needs. Such an economy consider as an economy of a town, country and economy of the world. As stated by A.J.BROWN, “Economy is a system…by which people of an area earn their living”. (T.R.JAIN, O.P.KHANNA .2009-2010)In tradition, different country has different economy, economy like planned, free market, and a mixture of this two economy. In free market economy, there is no government intervention and all dicision taken by individual and firm. In economy demand and supply of a product is affected by many factors other than price, and according to it movement and shift in demand and supply curve occurs.

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PRICE AND EFFECT ON DEMAND AND SUPPLY:

2. DEMAND:

DEFINITION:

According to Ferguson, “Demand refers to the quantities of a commodity that the consumers are able and willing to buy at each possible price during a given period of time, other things being equal.” Demand of a product is shaped by consumer, they may demand product on the basis of stutus, taste, income. (T.R.JAIN, O.P. KHANNA. 2009-2010). Now people like small, less weight, look of laptops. IDC report that pc shipment in 2006 was 10.1 and increase upto 16.7 in 2007.people more demand portable laptos than desktops. (www.v3.co.uk)

RELATIONSHIP BETWEEN DEMAND AND PRICE:

Demand of any product is affected by price of the product. According to Marshall, “The law of demand states that amount demanded increase with a fall in price and diminishes when price increase, other things being equal.”This relationship between demand and price is called law of demand. Here product is computer. There are two reasons by which demand of computer affected in the market.

1. INCOME EFFECT:

In this recession time, people have less income to spend. In this situation if price of the computer is rise, consumer will not able to purchase computer with their money. Because of that quantity demanded of computer is fall. This is called income effect when price of the computer (product) is rise.

2. SUBSTITUTION EFFECT:

In the competitive market there are many substitute for one product, like Compaq laptop have a competitor like dell, Samsung, Sony. If price of Compaq is rise consumer switch from Compaq to dell and demand for dell will rise. This is called the substitution effect when price rise. (JOHN SLOMAN. 2006)

DEMAND CURVE:

In the market people are demand for laptops at different price. This can be presented in graph. When data of price and quantity demand of a product present in the graph we get demand curve.

2.1 Demand for computer: [4]

Price of the laptops (monthly)

( In pounds)

Demand of laptops

(per month)

A

B

C

D

E