Meaning of demand:-
Demand means ‘desire’. But in economics demand means desire backed by purchasing power and willing to pay the price.
Law of demand:-
It explains the functional relationship between price and quantity demanded all to law of demand when all other things remain constant if the price increase then demand will decrease and if price fall then demand will increase. It mean there is inverse relation between price and demand.
Determinants of demand:-
1. price of the goods:
The demand for any commodity firstly depends upon its price. When the price rises demand decreases, when the prices falls demand increases.
2. prices of the substitute goods:
the demand for any commodity not only depends upon its price but also the prices of its substitute goods. for example, tea and coffee. Here the demand for tea depends upon price of the coffee.
3. prices of the complementary goods:
the demand for a commodity also depends upon the price of its complementary goods. for example, car and petrol. Here demand for petrol depends upon price of the car.
4. Income of the consumer:
The income of the consumer also influences the demand for a commodity. When the income rises people purchase the more quantity of goods. When the income falls they purchase less quantity of goods.
5. tastes and preferences of the consumer:
the tastes and preference of the consumer can also determine the demand for a commodity. When the tastes are changed, the demand for goods also changed.
6. population:
When the population is increased, the demand for goods also increases. When the population decreases demand also decreases.
7. Climate:
The climatic conditions also can influence the demand. In hot climatic conditions cool drinks are demanded. in rainy season umbrellas are demanded.
Demand means ‘desire’. But in economics demand means desire backed by purchasing power and willing to pay the price.
Law of demand:-
It explains the functional relationship between price and quantity demanded all to law of demand when all other things remain constant if the price increase then demand will decrease and if price fall then demand will increase. It mean there is inverse relation between price and demand.
Determinants of demand:-
1. price of the goods:
The demand for any commodity firstly depends upon its price. When the price rises demand decreases, when the prices falls demand increases.
2. prices of the substitute goods:
the demand for any commodity not only depends upon its price but also the prices of its substitute goods. for example, tea and coffee. Here the demand for tea depends upon price of the coffee.
3. prices of the complementary goods:
the demand for a commodity also depends upon the price of its complementary goods. for example, car and petrol. Here demand for petrol depends upon price of the car.
4. Income of the consumer:
The income of the consumer also influences the demand for a commodity. When the income rises people purchase the more quantity of goods. When the income falls they purchase less quantity of goods.
5. tastes and preferences of the consumer:
the tastes and preference of the consumer can also determine the demand for a commodity. When the tastes are changed, the demand for goods also changed.
6. population:
When the population is increased, the demand for goods also increases. When the population decreases demand also decreases.
7. Climate:
The climatic conditions also can influence the demand. In hot climatic conditions cool drinks are demanded. in rainy season umbrellas are demanded.
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