determination of law of demand
Answers
Answer:
The Five Determinants of Demand
The five determinants of demand are:
The price of the good or service.
Income of buyers.
Prices of related goods or services. These are either complementary, those purchased along with a particular good or service, or substitutes, those purchased instead of a certain good or service.
Tastes or preferences of consumers.
Expectations. These are usually about whether the price will go up.
For aggregate demand, the number of buyers in the market is the sixth determinant.
Answer: there are total 5 determination of demand these are follows
Explanation: 1. Own price of the commodity: there is inverse relation with the price and demand of the commodity.
2. Price of related goods: there are two types of good substitute goods and complementary good. Substitute goods can be substitute if there is rise in price or fall in the price of commodity. Eg tea and coffee. and complementary goods complete each others demand eg.pen and ink
3. Income of the consumer: increment in the consumer's income lead to shift him to normal goods leads to rise in the demand of normal goods and fall in the income leads to shift him to inferior good leads rise in the demand of inferior goods.
4. Taste and preferences: unfavorable change in taste and preference leads to fall in demand and favorable change leads to rise in the demand of the commodity.
5. Expectations : if there any expectations of rise or fall in the price of the commodity leads rise or fall in the demand of that commodity.
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