Question

There are many other variables in addition to price influence the quantity of a product that consumers demand. Explain which variables influence on the quantity of a product that you demand

Answer 1

Demand can be described as human wants backed by buying power.And there are various factors that influence the quantity of a good that the consumers demand.One of those factors are price of a good.Apart from that some other factors affecting the same are ,as follows:

1.Consumer's income

If a person is financially stable and have enough financial resources his or her demand for goods and services will be high when compared to a person with lower income.

There are two kinds of goods ,normal and inferior goods.Normal goods are goods whose demand increase when income increase and vice-versa.Whereas in case of inferior good increase in income leads to fall in demand and vice-versa.An example of normal good is clothing and that of inferior good is cheap food item that a person may buy because of his low income.

2.Price of related goods

There are two kinds of goods subtitute and complementary goods.Substitute goods are goods that can be used in place of each other .For example :tea and coffee.In such case if price of one good say, tea increase then demand for the other good say ,coffee increase as it become more cheaper.

Complementary goods are goods that are consumed together.For example printer and ink catridges .In this case if price of one good say, printer increase demand for other say, ink catridge will fall.

3.Taste and Preferences

Taste and preferences of consumers are dynamic in nature.If consumer have a favourable preference for a good then its demand is likely to rise.Otherwise the demand will fall if the good does not match tastes of the consumers.

4.Expectation of price change in future

If the price of a good is expected to rise in future then consumers may buy that good in larger quantity and this may lead to a rise in demand .For example if price of petrol is to rise in future then its current demand may show a hike.