What are the types of demand determinants?

Hello,

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First you need to know the demand for a product is determined by different factors. The main demand determinants are price, income, price of related goods and advertising. Therefore, demand is a multivariate relationship.

For instance, an increase in the price of a good will lead to a decrease in the quantity that may be demanded by consumers. And, similarly a decrease in the price of good will lead to increase in it's quantity demanded.

The graphical representation is known as the demand curve. The determinants of demand are factors that cause increase and decrease in the economic demand of the product or goods. They are:

*Price of the Product

People use price as a parameter to make decisions if all other determinants remain equal. As the law of demand says,  an increase in demand follows a reduction in price and a decrease in demand follows an increase in the price.

*Income of the Consumers

Rise in income of consumers leads to a rise in the number of goods demanded by consumers.

*Expectations of the consumers

Expectations of a higher income or expecting an increase in prices of goods leads to increase the demand of the quantity.

*Buyers in the Market

The number of buyers has a major effect on the total or net demand of the product. As the demand increases with increased number of buyers.

Hopefully this will help.

Best wishes.

Producers’ goods are also called as capital goods. These goods are used in the production of other goods. Machinery, tools and implements, factory buildings, etc. are some of the examples of capital goods.

Consumers’ goods are those goods, which are used for final consumption. They satisfy the consumers’ wants directly. Examples of consumers’ goods can be ready-made clothes, prepared food, residential houses, etc. The differentiation between a consumer good and a capital good is based on the purpose for which it is used, rather than, the good itself. A loaf of bread used by a household is a consumer good, whereas used by a sweet shop is a producer good.

Consumer goods are further classified as durable and non-durable goods. Examples of non-durable goods are sweets, bread, milk, a bottle of Coca-Cola, photoflash bulb, etc. They are also called single use goods. On the other hand, durable consumer goods are those which go on being used over a period of time, e.g., a car, a refrigerator, a ready-made shirt, an umbrella and an electric bulb.