WHAT ARE THE FACTORS DETERMINANTS OF MARKET DEMAND




Introduction: -The determinants of demand can be explained form the viewpoint of ‘market demand’ is as follows.
It refers to the total quantity of a commodity purchased at different prices by all consumers together in the market at a given time and place.




Determinants of market demand for a commodity:


1.      Size of population: -The larger is the size of population of a country, the greater is the demand for various goods and services and vice versa. When the population of a country increases rapidly over a period of time, the market demand of various goods and services also increases and vice versa.


2.      Distribution of income and wealth: -Market demand for various good and services also depends on equitable distribution income and wealth. If there were equitable distribution of income and wealth in the economy, the market demand would be high and vice versa.



3.      Standard of living of the people: -The higher is the standard of living of the people of country, the greater is the market demand for comforts and luxuries. In advanced countries like U.S.A, U.K, Australia, the standard of living of the people is very high and the market demand for comforts and luxuries is also very high.


4.      Level of taxation–A progressive taxation on income and wealth would result in less disposable income left in the hands of the people. Hence, the market demand for many goods would be low and vice versa.


5.      Social customs and festivals: -The social and festivals influence market demand for certain goods. For examples, during Ramzan, Diwali and Christmas Festivalsthere is a great demand for cloths, Greeting cards, cakes, etc..,           



6.      Promotional Activities: -The promotional activities undertaken by the seller in the market will not only affect the individual market demand, but also the overall demand in the market. For instance, sales promotion activities like free gifts can increase thee overall demand.