What are the types of demand determinants?
Answers
The five determinants of demand are:
- The price of the good or service.
- Income of buyers.
- Prices of related goods or services. ...
- Tastes or preferences of consumers.
- Expectations.
Answer:
hii
your answer is here !
Explanation:
i. Producers’ Goods and Consumers’ Goods:
Producers’ goods are also called as capital goods. These goods are used in the production of other goods. Machinery, tools and implements, factory buildings, etc. are some of the examples of capital goods.
Consumers’ goods are those goods, which are used for final consumption. They satisfy the consumers’ wants directly. Examples of consumers’ goods can be ready-made clothes, prepared food, residential houses, etc. The differentiation between a consumer good and a capital good is based on the purpose for which it is used, rather than, the good itself. A loaf of bread used by a household is a consumer good, whereas used by a sweet shop is a producer good.
Consumer goods are further classified as durable and non-durable goods. Examples of non-durable goods are sweets, bread, milk, a bottle of Coca-Cola, photoflash bulb, etc. They are also called single use goods. On the other hand, durable consumer goods are those which go on being used over a period of time, e.g., a car, a refrigerator, a ready-made shirt, an umbrella and an electric bulb.
Of course, the lengths of time for which they can go on being used vary to a good deal. A shirt may last a year or two. A car or a refrigerator may provide fairly useful service for 10 to 15 years. Old furniture can go on being used almost indefinitely so long as it is properly looked after. Durable goods are necessarily durable but not all non-durable goods are perishable. For example, coal can be stored indefinitely.
ii. Durable Goods and Non-Durable Goods:
Durable products present more complicated problems of demand analysis than products of non-durable nature. Sales of non-durables are made largely to meet current demand which depends on current conditions. Sales of durables, on the other hand, add to the stock of existing goods that are still serviceable and are subject to repetitive use. Thus it is a common practice to segregate current demand for durables in terms of replacement of old products and expansion of total stock.
Demand analysis for durable goods is complex. Determination of demand for these goods has to take into consideration the replacement investment and expansion of the industry. The reasons for replacement investment are due to technological developments making the existing technology outmoded and the depreciation of the capital over a period of time.
Besides durable consumers’ goods, the acceleration principle is also applicable to durable producers’ goods. Suppose the demand for consumer goods expands. Then there will be a need to expand the production of capital goods in order to produce the consumer goods. Thus, if more bicycles are demanded, more machinery will be required to produce bicycles.
iii. Derived Demand and Autonomous Demand:
When the demand for a product is tied to the purchase of some parent product, its demand is called derived demand. For example, the demand for cement is derived demand, being directly related to building activity. Demand for all producers’ goods, raw materials and components are derived. Also, the demand for packaging material is a derived demand. However, it is hard to find a product in modern civilization whose demand is wholly and has supposed to have less price elasticity than autonomous demand.
iv. Industry Demand and Company Demand:
The term industry demand is used to denote the total demand for the products of a particular industry, e.g., the total demand for steel in the country. On the other hand, the term company demand denotes the demand for the products of a particular company, e.g., demand for steel produced by TISCO.
follow me !