Introduction: -The determinants of demand can be explained form
the viewpoint of ‘market demand’ is as follows.
It refers to the total
quantity of a commodity purchased at different prices by all consumers together
in the market at a given time and place.
Determinants of market demand for a commodity:
1.
Size of population: -The larger is the size of population of a country, the greater is
the demand for various goods and services and vice versa. When the population
of a country increases rapidly over a period of time, the market demand of
various goods and services also increases and vice versa.
2.
Distribution of income
and wealth: -Market demand for various good and
services also depends on equitable distribution income and wealth. If there
were equitable distribution of income and wealth in the economy, the market
demand would be high and vice versa.
3.
Standard of living of
the people: -The
higher is the standard of living of the people of country, the greater is the
market demand for comforts and luxuries. In advanced countries like U.S.A, U.K,
Australia, the standard of living of the people is very high and the market
demand for comforts and luxuries is also very high.
4.
Level of taxation–A progressive taxation on income and wealth would result in less
disposable income left in the hands of the people. Hence, the market demand for
many goods would be low and vice versa.
5.
Social customs and
festivals: -The
social and festivals influence market demand for certain goods. For examples,
during Ramzan, Diwali and Christmas Festivalsthere is a great demand for
cloths, Greeting cards, cakes, etc..,
6.
Promotional Activities: -The promotional activities undertaken by the seller in the market
will not only affect the individual market demand, but also the overall demand
in the market. For instance, sales promotion activities like free gifts can
increase thee overall demand.
