Demand, refers to the consumer's desire, ability and willingness to purchase goods at various prices.
Non price determinants of demand are-:
1) Tastes and preferences- This is one of the major non price determinant of demand. This is concerned with specific likes and dislikes of an individual that is, whether the individual is willing to pay higher price for his favourite goods and services. For eg-: if an individual likes ice cream, he tends to buy more of it.
2) Price of related goods- Price of substitute as well as complimentary goods. No. Of substitutes available, for eg:- if price of tea leaves increases then people will shift to coffee increasing the demand for coffee. Whereas complimentary goods are those goods that go hand in hand. For instance if there is an increase in price of petrol demand for cars will automatically decrease.
3) Income- People with lower income level consume inferior goods whereas people with higher income will consume normal goods. In other words if demand for a good falls when income falls it is termed as normal goods. On the other hand if demand for a good rises if price falls then it is termed as inferior goods. For eg-: A family consumes 1 litre full cream milk a day. But as soon as their income level tends to be unstable, they purchase toned milk that is cheaper than full cream ones.
5) No. Of buyers- As more number of buyers enter the market as a result of population growth, market demand rises irrespective of prices.
Non price determinants of demand are-:
1) Tastes and preferences- This is one of the major non price determinant of demand. This is concerned with specific likes and dislikes of an individual that is, whether the individual is willing to pay higher price for his favourite goods and services. For eg-: if an individual likes ice cream, he tends to buy more of it.
2) Price of related goods- Price of substitute as well as complimentary goods. No. Of substitutes available, for eg:- if price of tea leaves increases then people will shift to coffee increasing the demand for coffee. Whereas complimentary goods are those goods that go hand in hand. For instance if there is an increase in price of petrol demand for cars will automatically decrease.
3) Income- People with lower income level consume inferior goods whereas people with higher income will consume normal goods. In other words if demand for a good falls when income falls it is termed as normal goods. On the other hand if demand for a good rises if price falls then it is termed as inferior goods. For eg-: A family consumes 1 litre full cream milk a day. But as soon as their income level tends to be unstable, they purchase toned milk that is cheaper than full cream ones.
4) Expectations- Expectations about future may affect demand for a good or service today. For instance if we are expecting that the price of petrol will increase in the nearby future, we are likely to go today and fill the tank.
5) No. Of buyers- As more number of buyers enter the market as a result of population growth, market demand rises irrespective of prices.
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