DEMAND

&
Its Factors

Presentation By:Bilal Sikander & Rahul Singh

What is
Demand ?
Demand for a commodity refers to the quantity of the commodity
that will be purchased at a specific price &
time.

Factors Affecting Demand

Price

of the commodity :-

As the price of a commodity changes, it

causes an inverse change in the
demand for commodity. It means the
demand for a commodity increases
when its price falls or vice-versa.

 Price

of related goods :Here the quantity demanded is based on the price of

related goods which are:
Substitute Goods
They are those goods which can be used in place of
one another. Demand for a particular commodity is
affected if the prices of its substitute falls or rise. For
example, Tea or Coffee . A fall in the price of coffee
(substitute goods) will reduce the demand for Tea or
vice-versa.
Complementary Goods
They are those goods which are used together to
satisfy a given want. A rise in the price of one
commodity results in the fall in the demand of other
commodity. For example, petrol & scooter, torch &
cells, etc. If the price of petrol goes up, demand for its
complementary good, scooter, will fall.

 Income

of the Consumers

An increase in the income of a consumer

( or household) generally increases the
demand for commodities whereas a fall in
income reduces the demand.

Normal Goods
They are those goods which show direct
relationship with income, i.e., increase in income
leads to increase in demand or vice-versa.
Giffen Goods
They are alse called inferior goods. Here increase
in income levels leads to fall in demand of inferior
goods or vice-versa. For example, Jowar is the
main food grain of the labour class. If their
income increase, they will prefer to buy superior
goods like wheat instead of jowar.

 Taste

& Preferences of consumer

Demand for a commodity is directly related with
the taste & preferences of the consumers. If the
comsumer prefers a particular commodity, its
demand will go up & vice-versa. Fashions &
advertisements play an important role in
determining the taste & preferences of a
consumer.
Expectations
If the consumer expects that there will be any
price rise in the near future then in that case
demand for that commodity goes up & vice-versa.
Like Petrol prices.

THANK
YOU