It is quite well that the change in tastes and preferences of consumers in favor of a commodity results in smaller demand for the commodity. With an increase in income, increased amount of most of the commodities in his consumption bundle, though the extent of the increase may differ between commodities. The amount demanded of a commodity also depends upon the income of an individual. When the price of one commodity and the quantity demanded of the other commodity move in the same direction (i.e., both increase together and decrease together). The related commodities are of two types’ substitutes and complements. When a change in price of the other commodity leaves the amount demanded of the commodity under consideration unchanged, we say that the two commodities are unrelated, otherwise these are related. The following factors affect an individual's demand for a commodity: The determinants of demand are also known as demand shifters. The factors that influence the demand are called the determinants of demands.

The demand for a commodity by a buyer is generally not a fixed quantity. Yc = Consumer Expenditures on related goods Ic = Incomes of consumers/customers/clientele

Qx = Quantity Demanded of product, per periodĭx = Design/style/quality-Cost of product The relation between quantity demanded and these above factors is referred to as the general demand function and is expressed as follows:ĭemand function may be presented as mathematical expression stating relationship between quality demanded of the commodity and its determinants is known as the demand function. (6) the number of consumers in the market. (5) the expected price of the product in future periods, and (4) the tastes or preference patterns of consumers, (3) the prices of related goods and services, The principal variables that influence the quantity demanded of a good or service are (1) the price of the good or service, It describes how much quantity of goods is purchased at alternative prices of good and related goods, alternative income levels, and alternative values of other variables affecting demand. Demand function is what describes a relationship between one variable and its determinants.

Befa notes pdf