Durable Goods and Non-Durable Goods:
Durable products present more complicated problems of demand analysis than products of non-durable nature. Sales of non-durables are made largely to meet current demand which depends on current conditions. Sales of durables, on the other hand, add to the stock of existing goods that are still serviceable and are subject to repetitive use. Thus it is a common practice to segregate current demand for durables in terms of replacement of old products and expansion of total stock.
Demand analysis for durable goods is complex. Determination of demand for these goods has to take into consideration the replacement investment and expansion of the industry. The reasons for replacement investment are due to technological developments making the existing technology outmoded and the depreciation of the capital over a period of time.
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