Determinants of Demand

Demand of an individual consumer indicates the various quantities of a good or service, the consumer is willing and able to buy at different prices during a particular time period, ceteris paribus. 

According to the law of demand, there is a negative casual relationship between the price of a good and its quantity demanded over a particular time period, ceteris paribus: as the price of the good increases, quantity demand falls; as the price falls, quantity demanded increases, ceteris paribus.

There are six determinants that affects demand: 

  1. Income the case normal goods
  2. Income in the case of inferior goods 
  3. Preferences and tastes
  4. Prices of substitute good 
  5. Prices of complementary goods 
  6. Demographic (population) changes, i.e. changes in the number of buyers 

demand falls and shifts left

demand rises and shifts right

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