Demand and Factors affecting Demand

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Demand:

The amount of a particular economic good or service that a consumer or group of consumers will want to purchase at a given price is known as demand. The demand curve is usually downward sloping since consumers will want to buy more as price decreases. Demand for a good or service is determined by many different factors other than prices, such as the price of substitute goods and complementary goods. In extreme cases, demand may be completely unrelated to price, or nearly infinite at a given price. Along with supply, demand is one of the two key determinants of the market price.

According to Milton H. Spencer, “ Demand is the quantity that will be purchased of a particular commodity at various prices, at a given time and place.”

Determinants of Demand/ Factors affecting Demand:

  • Good’s own price
  • Price of related goods
  • Personal Disposable Income
  • Tastes or preferences
  • Climate and fashion
  • Consumer expectations about future prices, income, and availability
  • Population
  • Nature of the good
  • Technological progress
  • Taxation policy
  • Consumer’s expectations
  • Change in real income etc.

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