Determinants of demand
The term 'demand' refers to the quantity of goods or services that buyers are willing and able to purchase at various price during a given period of time
Effective demand (three main points remember in mind)
1.desire
2.means to purchase
3.willingness to use those means for that purchase
Quantity demanded
The quantity demanded refers to the quantity of a goods or service that buyers are willing and able to purchase at given prices during a given period of time
Two things are to be noted about the quantity demanded
(1) The quantity demanded is always expressed at a given price
(2) The quantity demanded is flow concept
Now know about the
Determinants of demand
The determinants of demand is the relationship between demand and it's determinants
Following determinants of demand are:
1.Price of the commodity
2.Price of related commodities
3.Disposable income of the consumer
4.Tastes and preferences of buyer
5.Consumers Expectations
6.The level of national income and it's distribution
7.Government policies and regulations
Now how to effects demand by this determinants of demand
When the price is increases the demand is decreases because price and demand have inverserly related to each other for eq
A table is ₹50 then the demand is 20quantity suddently the price of table is increases for₹70 then the demand is fall 15 quantity
1.Price of the commodity(their are two types)
A. Complementary goods and services are those goods and services which are bought or consumed together means when two commodities are complements, a fall in the price of one will cause the demand for the other to rise for example a fall in the price of petrol driven cars would lead to a rise in the demand for petrol.
B. Competing goods or substitutes when they satisfy the same want and can be used with ease in place of one another for example tea and coffee when the price of tea increase then the demand of coffee is increase
2.Disposable income of the consumer
The purchasing power of a buyer is determined by the level of his disposable income
Increase in disposable income tends to increase the demand for a particular types of goods and services at any given price. A decrease in disposable income generally lowers the quantity demanded at all possible prices
The nature of relationship between disposable income and quantity demanded depends upon the nature of goods for example A person whose disposable income is₹25000 they demanded 100quantity then his disposable income is increases by ₹35000 he demanded 150 quantity.
3. Tastes and preferences of buyers
The demand for a commodity also depends upon the tastes and preferences of buyers and changes in them over a period of time. Goods which are modern or more in fashion higher odity also depends upon the tastes and preferences of buyers and changes in them over a period of time. Goods which are modern or more in fashion higher demand than goods which are of old design or out of fashion generally less demand.
Tastes and preferences depend on buyers
Buyers likes the product the demand of product is high for example
A latest led tv is more likely as compared to old design tv the led tv is higher demand but old design tv is less demand
Read more how to draw demand curve
4.Consumers Expectations
When the consumers expect the price of goods increases in future they demand more goods in present for example golds, diamonds etc
When consumers expect the price increase in future they demand more golds in current.
5.The level of National income and it's Distribution
The level of national income is a crucial determinants of market demand. Higher the income, higher will be the demand for all normal goods and services. For example
The national income of ₹500000 they demand 5000units then the national income increases ₹1000000 then demand is 10000unit
Propensity to comsume
The wealth of a country may be unevenly distribution so that there are a few very rich people while the majority is very poor for eaxmaple
The national income ₹500000 distribution unevenly
Richer section poor section
70% 30%
Under such conditions the propensity to consume of the country will be relatively less because the propensity to consume of the rich people is less than that of the poor people the demand for consumer goods will be comparatively less.
6.Government policies and regulations
The governments influence demand trough it's taxation, purchases, expenditure and subsity policies.
When the demand for goods is decreased the government down the taxes prices of goods because the demand for goods is increased
Conclusions
The determinants of demand show the relationship between demand and it's determinants they show how to effects this determinants of demand help to the business to make a better planning to develop desires product
FAQ
1.what are some examples of demand?
Ans if the consumers desire and able to purchased the car they by a car it's is a demand because consumers are willing , desires, and able to purchased
2.What are the 5determinations in economics ?
Ans Price, prices and related goods, tastes, consumers expections
3. What are 5 example of inelastic products
Ans Petrol, salt, medicine, golds, cigarattes etc.
