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Discuss the determinants of denand


Tanya Chaubey 24th Oct, 2018
Answer (1)
TANU JAIN 24th Oct, 2018

Hello Tanya,

Here are the determinants of the demand :

1. Price of the goods- there is the inverse relationship between price and demand. When the price of the commodity increase than the demand for that commodity will decrease or vice versa.

2. Number of Population- when an increase in the population the demand for the various goods will also increase or vice versa.

3. Distribution of Income - if there is an unequal distribution income it means that some people having a large part of the income and some having a small part of the income, that affects the demand of the goods. A person who has more income they demand luxuries goods and a person who has a small part of the income they are not able to demand luxuries goods they only buy those goods which they afford.

4. Taste and preferences- when a person developed a taste and preference for a commodity than the demand for that commodity will increase or vice versa.

5. Income-  it consists of two factors (a) Normal Goods (b) Inferior Goods

(a) Normal Goods- when the income increase than the demand for normal goods will increase or vice versa.

(b) Inferior Goods- when the income decrease the demand for inferior goods will also increase or vice versa.

5. Prices of related goods- it consists of two factors (a) Complementary Goods (b) Supplementary Goods.

(a) Complementary Goods- are those goods which are used simultaneously like petrol or scooter when then the price of the petrol increase than the demand for scooter decreases or vice versa.

(b) Supplementary Goods - are those goods which are used in place of one another like Tea or Coffee when the price of the tea increase than the demand for a coffee increase and demand for tea decrease automatically or vice versa.

Hope this will help you.Good luck.



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