Q.What are the factors that determine demand ? (Any Five)

Demand is governed by many factors beyond price. Five chief determinants are the price of the good itself, the consumer's income, the prices of related goods (substitutes and complements), the consumer's tastes and preferences, and expectations about future prices and income.

Meaning

Demand means the quantity of a commodity that a consumer is willing and able to buy at a given price during a given period. The relationship between demand and the factors influencing it is expressed by the demand function.

Factors determining demand (any five)

• Price of the commodity: Normally, the lower the price, the larger the quantity demanded, and vice versa, as stated by the law of demand.
• Income of the consumer: For normal goods, demand rises as income rises; for inferior goods, demand falls as income rises.
• Prices of related goods: The demand for a good is affected by the prices of its substitutes (for example tea and coffee) and complements (for example car and petrol). A rise in the price of a substitute increases demand for the good, while a rise in the price of a complement decreases it.
• Tastes, preferences and fashion: Favourable tastes, habits, customs and fashion increase demand; a good going out of fashion loses demand. …