Question

1. Prepare a demanding schedule for an apple i-pad in the Indian market.
2. List the factors which determine market demand for a commodity of your choice.(400 words)

Answer 1

Market demand for a commodity depends upon number of factors. Some of which are mentioned below:

1. Price of the given commodity: Generally there exists a inverse relationship between the price of a commodity and the quantity demanded. Whenever price rises, the quantity demanded falls. As seen in the above demand schedule, in every step as price increased, demand for it reduced.

2.Price of related goods:

Related goods are those goods which in some way affects the demand for other goods. Such goods are catagorised into two subparts.

A) substitute goods- these are those goods which can be used in place of one another. Colgate as a toothpaste and pepsodent as a toothpaste is a example. In this case when price of (say) colgate increase, people stop buying colgate as it is now costlier and hence people move out in search for pepsodent. This increase demand for pepsodent toothpase. Therefore an in increase in the price of substitute goods leads to an increase in demand for the counter part of the substitute good and vice versa.

B) Complementary goods- herein goods are used in combination. For example : pencil and eraser. An increase in the price of pencil will reduce demand for pencil as well as eraser. As pencil and eraser are used together. Hence the increade in price of pencil will lead to reduction in demand for pencil as well as eraser.

3) Income of a consumer- demand for a commodity is dependent upon the level of income of a person. If a person who has a job now and loose the job later , then that person is likely to cut down his expenses as earlier what all were affordable for him is no more affordable for him. Hence a decrease in income will lead to low demand and vice versa.

4) Expectations of future price change: if a consumer forcasts and finds that the price of goods will change then it will affect his buying pattern. Suppose the people are able to understand that prices of sugar will rise as news articles states that this year production of sugar was too low. Then the person will buy more of sugar in advance in order to keep his stock high so that he doesnt need to purchase it during high price. Hence future assumptions on price change affects buying pattern and same goes for demand.

5) taste and preferances of people- consumers always go with trend and follow the lastest styles. Hence when consumer taste changes , demand also gets affected. Suppose people reaslise the need to eat healthy food. When such preference emerge, there is a chance that people stop consuming junk foods and start prefering healthy food. Hence demand for junk food in this case will reduce.