Determinants of

Demand
Presented by: AIRA MALINAB
What is the Determinants
of Demand?
 Determinats of Demand
Price
It is the most important determinant. It affects the
demand for goods at a large extent. And as the law of
demand, there is an inverse relationship between the
price and quantity demanded.
 Determinats of Demand
Income of Consumers
Income is another main determinant which represents the purchasing power of the consumer.
When income increases, the consumer starts purchasing more which results in more demand
and vice versa while other factors remain constant.
• Normal Goods
• Inferior Goods

Tastes and preferences

These has a great impact on the demand for the given commodity. These are highly influenced
by the change in trends, fashion, lifestyle, gender, age, religious values, standard living,
customs, and common habits. Any change in these factors results in a change in tastes and
preferences of consumers. Consumers switch over to new products in place of old ones for their
consumption.
 Determinats of Demand
Population
The size of the population determines aggregate demand in the country. The more growth of
population the more there will be the demand and vice versa. Thus, the growth of population is
directly related to demand of the commodities and vice versa for the low populated places.

Expectations of Consumers
If the price of the product is expected to rise in future, the consumers demand more to store it in
the short run and vice versa if the price is expected to fall.
 Determinats of Demand
Price of related Goods
Demand for a given commodity can be influenced by the price of related goods. These related
goods can be classified as:
• Substitute goods
• Complementary goods
Example in
change of
Income
Thank you for
Listening!