Introduction Supply and demand are the two fundamental components of a market. Supply describes how producers and manufacturers, large or small, react or behave in the marketplace when producing and selling a product.
Some of the major factors affecting the demand in microeconomic: Demand for a commodity increases or decreases due to a number of factors. The various factors affecting demand are discussed below: Price of the Given Commodity: It is the most important factor affecting demand for the given commodity.
Generally, there exists an inverse relationship between price and quantity demanded. It means, as price increases, quantity demanded falls due to decrease in the satisfaction level of consumers.
Demand D is a function of price P and can be expressed as: Price of Related Goods: Demand for the given commodity is also affected by change in prices of the related goods. Related goods are of two types: Substitute goods are those goods which can be used in place of one another for satisfaction of a particular want, like tea and coffee.
An increase in the price of substitute leads to an increase in the demand for given commodity and vice-versa.
For example, if price of a substitute good say, coffee increases, then demand for given commodity say, tea will rise as tea will become relatively cheaper in comparison to coffee. So, demand for a given commodity is directly affected by change in price of substitute goods.
Complementary goods are those goods which are used together to satisfy a particular want, like tea and sugar. An increase in the price of complementary good leads to a decrease in the demand for given commodity and vice-versa.
For example, if price of a complementary good say, sugar increases, then demand for given commodity say, tea will fall as it will be relatively costlier to use both the goods together.
So, demand for a given commodity is inversely affected by change in price of complementary goods. Examples of Substitute and Complementary Goods: Tea and Coffee 2. Coke and Pepsi 3. Pen and Pencil 4. CD and DVD 5. Ink pen and Ball Pen 6. Rice and Wheat Complementary Goods: Tea and Sugar 2.
Pen and Ink 3. Car and Petrol 4. Bread and Butter 5. Pen and Refill 6. Brick and Cement For detailed discussion on substitute goods and complementary goods, refer Section 3.
Income of the Consumer: Demand for a commodity is also affected by income of the consumer. However, the effect of change in income on demand depends on the nature of the commodity under consideration.
If the given commodity is a normal good, then an increase in income leads to rise in its demand, while a decrease in income reduces the demand. If the given commodity is an inferior good, then an increase in income reduces the demand, while a decrease in income leads to rise in demand.
Suppose, income of a consumer increases.
As a result, the consumer reduces consumption of toned milk and increases consumption of full cream milk.Sustainability and Water August 12, Water tables all over the world are falling, as "world water demand has tripled over the last" 50 years.
I hope everyone had a wonderful and delicious Thanksgiving!
Today, I’m continuing my series on common food additives. Last time, I discussed the health effects of carrageenan, a food additive that is commonly used as a stabilizer, thickener, or emulsifier. Another additive that shares many of these functions in commercial foods is xanthan gum, which is also popular in gluten-free baked goods.
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Sep 04, · Factors affecting demand: 1. Price: when P goes up, demand goes down and vice versa. What are the factors affecting demand and supply?
Factors affecting demand for the supply of wheat.
This essay will forecast the grain shipping markets by analysing various factors which will affect the grain markets. This essay will look into various supply and demand factors affecting the shipping industry by giving previous statistical data and then analyse and forecast the data for the supply and demand factors.
This effect is. In this example â€“ at 1 rupee you demand units of a commodity, but at Rs. 2 you demand just You can get fancy and call this a downward sloping demand curve.