Determinants of Demand

A detailed Summary of Determinants of Demand

In economics, we have learned that price is the major factor on the quantity demanded. Many decisions and results have often depended only on prices of goods and services. However, passages of time allow factors other than price to influence demand significantly. These factors are called the determinants of demand and they include consumer tastes and preferences, market size, income, prices of related goods, and consumer expectation. Change in any one of theses determinants can cause a change in the overall demand of a good or a service.

Changes in consumer tastes and preferences can have a major impact on demand for products. For example, if BMW has a new model of the 7 series that is just released, the popularity of the car will be high and thus making an increase on the demand of the product. After a period of time, especially new car models are released quite often, the

Income is general the main source of peoples' purchasing power, which it applies to the income effect that state the relationship of direct relationship between income and quantity demanded. However, there are exceptions in some cases that wouldn't apply to this relationship. For example, an increase in a person's income might bring his or her desire to buy a more luxury cars. As an effect, the demand of passenger cars will drop.

The demand for a good is often connected to the demand for related goods. This means that changes in a products price can affect demand for the product's related goods. There substitute goods and complementary good that we used in economics. Substitute goods are the goods that have tendency of to replace a similar high-priced product. For example, a BMW 5-series can be considered to be a substitute good for BMW 7-series. A complementary good is t

Some common words found in the essay are:
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Approximate Word count = 592
Approximate Pages = 2 (250 words per page double spaced)

Category: Politics

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Determinants of Demand

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