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Determinants of Demand

This document outlines the key determinants of individual and market demand. For individual demand, the main factors are price, income, tastes/preferences, prices of related goods, advertising, and expectations. Market demand is also influenced by price as well as population growth, weather, taxes, credit availability, savings patterns, and money supply. The demand function mathematically represents the relationship between demand and its determinants like price, income, and related prices. Finally, the law of demand states that demand and price are inversely related - as price increases, demand decreases - assuming other factors remain constant.

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Aditya Dwivedi
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2K views2 pages

Determinants of Demand

This document outlines the key determinants of individual and market demand. For individual demand, the main factors are price, income, tastes/preferences, prices of related goods, advertising, and expectations. Market demand is also influenced by price as well as population growth, weather, taxes, credit availability, savings patterns, and money supply. The demand function mathematically represents the relationship between demand and its determinants like price, income, and related prices. Finally, the law of demand states that demand and price are inversely related - as price increases, demand decreases - assuming other factors remain constant.

Uploaded by

Aditya Dwivedi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Determinants of Demand

The main demand determinants of individual demand that are:-

1. Price of the Product


2. Income of the Consumer
3. Taste and Preferences
4. Price of related Good and Service
5. Advertisement, Promotion and Sales
6. Consumer Expectation

Determinants of Market Demand


1. Price of the Product
2. Growth of Population
3. Weather Condition
4. Tax Rate
5. Availability of Credit
6. Pattern Of Saving
7. Circulation Of Money

Demand Function
The demand function is an algebraic function of the relationship between
demand of the commodity and its various determinants that affect his quantity.

qD = f (price, income, prices of related goods, tastes, expectations)

Law of Demand
The law of demand states that other factors being constant, price and quantity
demand of any good and service are inversely related to each other. When
the price of a product increases, the demand for the same product will fall.
Assumptions of Law of Demands
1. No change in habits, customs and income of consumers.
2. Taste of the buyer should not change.
3. Price of other goods should remain constant.
4. No new substitute for the commodity available.
5. Price rise in future should not be expected.

Himanshu Singh
B.B.A LL.B

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