Published by: sadikshya
Published date: 28 Jun 2021
Determinants of demand refer to the factor that affects the demand for a commodity. The following are the main determinates of the demand.
Price of goods and services
The quantity demand for goods and services depends open its own price. Generally, price and quantity demand of a commodity are inversely related when the price of a commodity falls, its quantity demand increases and vice-versa.
The income of the consumer
The income of the consumer is another factor that affects the demand for a commodity. Normally income of the consumer and demand for a commodity is positively related when income increases demand a commodity also increases and vice-versa.
Price of related goods
Demand for a commodity also dependent upon the price of its related goods. Related goods are two types of compliment and substitute.
Tastes and preference of the consumer
If consumer developed for social liking towards a commodity due to the habit of fashion then the consumer generally purchase the commodity irrespective of its price.
Size of population
An increase in the population generally increases the demand for goods and services. While a decrease in the population does the opposite. This is because an increase in population increases the member buyers in the market.
Government policy
Demand for a commodity also depends upon the government policy towards the commodities. The government can increase or decrease the consumption of a commodity by persuading the consumer about its beneficial or harmful effect.
Advertisement
Attractive and aggressive advertisement by the consumer is likely to increase demand for their product this is because there are many buyers who are very much sensitive to an advertisement.
Season and climate and festivals
Demand for the goods and services also depend upon season climate and festivals. For example during the winter demand for a woollen increase similarly during dashin and tihar demand for cloth and meat is very high.
Urbanization
The demand for goods and services are generally higher in town and cities, then in the village. The expansion of town and city leads to an increase in demand for goods and services.
Consumers credit facilities
It credit facilities are easily available, the consumer would be encouraged to buy more than what they would do in the absence of such credit. Facilities demand expensive durable goods like vehicles, houses, etc are mainly effected by consumer credit facilities.