What are the determinants of Demand
Answers
Answer:
The demand of a product is influenced by a number of factors.
An organization should properly understand the relationship between the demand and its each determinant to analyze and estimate the individual and market demand of a product.
The demand for a product is influenced by various factors, such as price, consumer’s income, and growth of population.i. Price of a Product or Service:
ii. Income:The relationship between the income of a consumer and each of these goods is explained as follows:
a. Essential or Basic Consumer Goods:
Refer to goods that are consumed by all the people in the society. For example, food grains, soaps, oil, cooking fuel, and clothes. The quantity demanded for basic consumer goods increases with increase in the income of a consumer, but up to a fixed limit, while other factors are constant.
b. Normal Goods:
Refer to goods whose demand increases with increase in the consumer’s income. For example, goods, such as clothing, vehicles, and food items, are demanded in relatively increasing quantity with increase in consumer’s income. The demand for normal goods varies due to .different rate of increase in consumers’ income.
c. Inferior Goods:
Refer to goods whose demand decreases with increase in the income of consumers. For example, a consumer would prefer to purchase wheat and rice instead of millet and cooking gas instead of kerosene, with increase in his/her income. In such a case, millet and kerosene are inferior goods for the consumer.
However, these two goods can be normal goods for people having lower level of income. Therefore, we can say that goods are not always inferior or normal; it is the level of income of consumers and their perception about the need of goods.
Explanation:
Answer:
- INCOME OF BUYERS
- THE PRICE OF THE GOOD OR SERVICE
- TASTES OR PREFERENCES OF CONSUMERS
- EXPECTATIONS
- PRICES OF RELATED GOODS OR SERVICES
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