Explain briefly three determinants of demand

Demand relating to a commodity represents the amount of some commodity which a consumer wisher to purchase and is capable of affording, provided the prices of those goods in addition the consumer’s incomes.

Three determinants of demand are:

(A) Price of product – Price is considered as a parameter to form decisions if other factors are kept equal or constant. As per the law of demand, price of the commodities affects demand in such a way that when it falls, the demand for those commodities enhances and vice-versa.

(B) Consumers’ income – Increasing incomes result in a hike in the quantity of good demanded by consumers. Likewise, a fall in income is complemented by decreased consumption range. This relation occurring between demand as well as income is not linear, whereby marginal utility determines the ratio of alteration in demand levels.

(C) Prices of related commodities – With complementary products, a rise in the price of a single product will result in a reduction in the amount demanded for a complementary product, for example, rise in bread’s price will decrease the demand for butter. Contrarily, an enhancement in price of a product will result in a rise in the demand of a substitute product, for example, rise in tea’s price will enhance the demand for coffee while decreasing tea’s demand.