1. price of other commodities which are related to the good in question:
There are two possible relations between the demand of one commodity and the price of other commodity.
A fall in price of one commodity (X) may lower the quantity demanded of good Y, the two commodities x and y, are said to be substitutes. When prices of one commodity fall, the household buys more of it and less of commodities that are substitutes for it.
Example:
a. Butter and Margarine
b. Sukuma wiki and Cabbage
c. Beef and Fish
If a fall in price of one commodity raises the quantity demanded of another commodity the two are said to be complements. When the price of one commodity falls, more of it is consumed and more of those
commodities that are complementary to it are consumed also. Example, motor cars and petrol, butter and bread etc.
2. Consumer income
We would expect a rise in income to be associated with a rise in the quantity of a good demanded. Goods obeying this rule are called normal goods. In some cases a change in income might leave the quantity demanded completely unaffected. This will be the case with goods for which desire is completely satisfied after a level of income is obtained.
- Example: if one used to eat salt, the consumption of it will not change even though his income rises, unless his income is very low. Incase of other commodities, rise of income beyond a certain level may lead to a fall in the quantity that the household demand. If the demand for a commodity falls as
income rises, the good is called inferior good.
The relation between income and quantity demanded can be shown by the use of Engels curve
3. Consumers tastes and preferences
When the tastes for a commodity are favorable, consumers will prefer more of that commodity to other commodities thereby increasing the demand for the commodity. For example, in the beauty, would the taste of women have moved towards colored hair products such as pony tail or dyeing of hair. So the demand of such products would hike.
4. Advertisement:
As a producer advertises his product, he creates awareness that his products exist, and he tries to show the superiority of his product over others in the market. If we hold other factors constant, we expect that an increase in advertisement expenditure will lead to an increase in demand.
Advertising is
- Informative
- Persuasive on price, availability, performance.
5. Consumers expectations about future prices:
If consumers expect the price of a commodity to rise in future, they will buy more of the commodity now and store it. In this case quantity demanded increases. However, should they expect a fall in price in future they will buy less on the commodity now hoping to buy more in future after the price has fallen. In this case quantity demanded becomes less.
6. The size of population and its composition.
The greater the size of population to satisfy, the greater the quantity consumers will be willing to demand. The fewer the consumer in the market, the less the quantity demanded will be. When we talk of composition of population we are talking of the sex proportion and age group. Certain commodities are manufactured for certain age group and sex. For instance, cosmetics are meant to be used by women, napkins by infants, shaving cream by men. So producers consider these factors before deciding how much to produce. Who shall be his target market?
Wilfykil answered the question on
March 6, 2019 at 06:20