Introduction: -The determinants of demand can be
explained form the viewpoint of ‘Individual demand’ is as follows.It refers to the
quantity of a commodity purchased by an individual at different prices, at a
given time and place.
Determinants of individual demand for a commodity:
1.
Price: -Demand for a commodity is mainly influenced by its price. Demand
varies inversely with price. Normally, more quantity is demanded at lower
prices and less quantity is demanded at higher price.
2.
Price of substitute: -If a substitute is available at a lower price, people will demand
cheaper substitute goods than costly goods.
3.
Price of
complementary goods: -Complementary goods have joint demand. More than two or more gods
are jointly demanded to satisfy a want. for example, car and petrol, paper and
pen, etc. in such a case, a change in the price of one commodity would also
affect the demand for other commodity. If the prices of the petrol rise, the
demand for car would fall and vie versa.
4.
Income: -Purchasing power or ability to pay is
the basic requirement for a demand. Disposable income is the income at the
disposal of the people after paying direct taxes such as income tax. Generally,
rich consumers buy more goods and service than the poor people do.
5.
Utility: -Utility is the basic purpose for
demanding a commodity. If a commodity does not provide utility to the consumer,
he will not demand it. For examples, there is no demand for cigarettes for a
non-smoker.
6.
Quality: -The better the quality, the higher is the demand. Individual will
buy a product of better quality even if the price is more.
7.
Taste and Habit: -Demand for a commodity depends on taste, fashion and habit. A
consumer will buy certain goods on account of force of habit e.g. Cigarette,
tobacco, pan masala, wines etc. Therefore the quantity demands of these goods
would change when there is a change in habit, such as giving up smoking, wines
etc.
8.
Advertisement and
salesmanship: -Advertising and salesmanship
have a tremendous influence on consumers; choice. The demand for many products
such as cosmetics, soft drinks, home appliances and consumer durables etc. is
promoted through these methods.
