DEMAND AND ITS FUNCTION AND

DETERMINANTSN OF DEMAND

V.PRABH
17PAIE0056
SUBJECT-M.E
 Demand
Demand refers to that particular quantity o
f commodity that a consumer is willing to a
nd able to purchase at a particular price.
Demand for a community implies to
1. Desire of the customer to buy the product
2.His willingness to buy the product
3. Shuefficent purchasing power in his positi
on to buy the product
 Demand function
It is mathamatical function repercussions to quan
tity or commodity demand and it's. Determinant i
s called demand function.
Qdx=f(Px,Yp,P1-------Pn-1,T,A,Ey,Ep,U)
Px= Price of the product x
Y= Income of House Hold
P1-------PN-1=Price of related products
T= Tast and preference of consumer
A= Advertisement experience
Ey=Expected of future Incom
Ep= Expected of future price
U= All other determines which are not covered
Main determinants of Demand are as
follows:
 Price of Commodity

 Income of the consumer

 Taste and preference
 Price of related goods
 Advertisement and sales propogunda
 Growth of population
 Weather conditions
 Tax rate
 Availability of credit pttren of saving
Price of a commodity
The law of demand stats thatif other thing
s remain the same, the demand of the co
mmodity is inverely related to it's price. It
implies that a rise in price of a commodity
brings about a fall in it's purchase and vic
e versa.
Income of the consumer
The income of the consumer is another
important which influence demand the ability to
buy a commodity depends upon the consumer
When the income the consumer increase,they buy
more and more when income falls they buy less.
Rich consumer demand more and more goods bec
ause his purchasing power is high.
Taste and preference
The demand for a product depends upon taste an
d preference of the customer
If the consumer develop taste for a commodity th
ey buy whatever May be the price.A favourable ch
ange in consumer preference will cause the dema
nd to increase. Linkwise an unfavorable change in
consumer preference will cause the demand to de
crease.
Advertaisement and sales
In modern times the preference of consu
mer can be altered by advertisement and
sales. Advertaisement helps in increasing
demand by information the potential cons
umer about the availability of the product,
by showing the superiority of the product,
and by influencing consumer choice again
staga the rival product.
Consumer expectations
A consumer expectations about the future chan
ge in price and income May also affect his dema
nd if consumer expects a rise in price he may b
uy large quantities of that particular community
.
Growth of population
The growth of population is also another import
ant to factor that the market demand with the i
ncrease in population, people naturally demand
more goods for their survival
Weather conditions
Seasonal factors also affect the demand.
The demand for certain items purely depe
nds on climate and weather conditions. F
or example, the growing demand for Cold
drink during the summer season and the
demand for sweats during the winter seas
on
Tax rate
The tax rate also affect the demand. High
tax rate would generally mean a low dem
and for the goods. At certain times
The government restricts the consumption of a
commodity and use the tax as a wee weather w
eapon.
Availability of credit
The purchasing power is influence by the availa
bility of credit.uf there is availability of cheaper
credit, the consumer try trying to spend more c
onsumer durables therby demand for certain pr
oduct increase.
 Conclusion
All the determinants of Demand are ver
y important. A Business Firm should h
ave knowledge and information about al
l these factors in order to finalize its own
production and marketing strategies. Fi
rm should not ignore any of the factors
determining Demand as it may lead to i
ncorrect forecast of Sales.
 References
 Business Economics - M.M Gupta
 Macroeconomic Policy Environment – Sh
yamal Roy
 Macroeconomics – Dornbusch & Fischer
Thanks you...