What is market demand for a good? Name the factors that determine market demand.
What is market demand for a good? Name the factors that determine market demand.
Market demand refers to total demand by all buyers of a commodity in the market.
Market demand for a commodity is affected by the following factors
(i) Price of the commodity: When price of the commodity increases in the market, its quantity demanded decreases and vice-versa.
(ii) Income of the consumer: Market demand for a commodity is directly related to income of the consumer. Increase in income of the consumer causes an increase in market demand for the commodity.
(iii) Prices of related goods: In case of substitute goods, demand for a commodity falls with a fall in price of the substitute commodity. In case of complementary goods, market demand for the commodity rises with a decrease in the price of the complementary commodity:
Market demand refers to total demand by all buyers of a commodity in the market.
Market demand for a commodity is affected by the following factors
(i) Price of the commodity: When price of the commodity increases in the market, its quantity demanded decreases and vice-versa.
(ii) Income of the consumer: Market demand for a commodity is directly related to income of the consumer. Increase in income of the consumer causes an increase in market demand for the commodity.
(iii) Prices of related goods: In case of substitute goods, demand for a commodity falls with a fall in price of the substitute commodity. In case of complementary goods, market demand for the commodity rises with a decrease in the price of the complementary commodity:
