Demand is fluctuating time to time. There are majorly six factors which affect the demand for a commodity (Product).
Determinants of Demand Mean
- Consumer preferences: personality characteristics, occupation, age, advertising, and product quality, all are key factors affecting consumer behavior and, therefore, demand.
- Prices of related products: an increase in the price of one product will cause a decrease in the quantity demanded of a complementary product. In contrast, an increase in the price of one product will cause an increase in the demand for a substitute product.
- Consumer income: the higher the consumer income, the higher the demand and vice versa.
- Consumer expectations: expectations for a higher income or higher prices increase the quantity demanded. Expectations for a lower income or lower prices decrease the quantity demanded.
- The number of buyers: the higher the number of buyers, the higher the quantity demanded, and vice versa.
- Other factors: the weather and governmental policies that may expand or contract the economy affect the demand for particular products or services.