CA Foundation Business Economics - Determinants of Demand

This online class explains “Determinants of Demand” or simply, the factors that influence demand for goods and services which is a part of CA foundation course for the subject ‘Business Economics & Business and Commercial Knowledge’. In this video the factors are explained to the point with examples for each factor.
The quantity of a given product whether goods or services that is purchased by a consumer depends on a number of determinants.

The determinants of Demand could be
1. Price- if a price of a product is high, consumers might choose to buy another product or not buy the product at all
2. Second is the taste and preferences that consumer has. Consumer might choose products that are trendy or more fashionable.
3. Consumer expectations is another determinant. If consumer expects the price of a particular product to increase in future or rather become scarce in production, consumers might want to buy more quantity now.
4. The fourth determinant is how much money consumers have. Does income of consumer supports all that he intends to buy. If income is high, there are chances that demand would be for more luxurious products as consumer is able to afford them.
5. Another determinant is the price of related commodities. Now related commodities are of two types; Complementary goods and substitutes.
a. Complementary goods are ones that are to be consumed together e.g. Car & petrol, bread & Butter etc.
b. Substitutes are goods that can satisfy the same need and can be used in place of each other easily. The most common e.g. will be Tea & Coffee.
All these determinants can be expressed in the form of mathematical equation denoting the demand function as follows
D = fn { P + X1 + X2 + Xn }
Where,
D is Quantity demanded
P denotes price of the commodity
X1, X2…Xn denotes the determinants of demand explained earlier like income, tastes & preferences, customer expectations etc.

Видео CA Foundation Business Economics - Determinants of Demand канала FINMAESTRO