We all know that price can influence demand but there are some other factors which also can create impact on demand. They are known as non-price determinants.
Imagine you used to consume Miniket rice, but few months ago you got promotion and now started using Basmati rice. So when your income increase, you start neglecting inferior goods which means when income increase, demand of inferior goods decrease and demand of superior goods increase.
Imagine the price of tea start decreasing. As a result the demand of tea also will be increase. And people drink tea with sugar. So the demand of sugar will also increase. So in case of compliment goods, change in the price of one goods, can be reason of change in demand for the other goods.
If the number of buyers in any market increase, the demand also will increase.
Imagine you live in a remote location where only tea was available in the market, but recently coffee also introduced on that area and you noticed that the demand of tea is decreasing gradually. So availability and price of substitute goods also create impact on demand.
Imagine you expect price of petrol will increase in next week. So you'll start resurve petrol from this week. That means expectations of buyers can also influence demand.
Seasonality also can influence demand. For example, demand of AC will increase in summer and decrease in winter.
So apart from price, those non-price determinants can also influence demand.
Economics when applied to real life sounds beautiful. this blog is for those students who are discovering the different facets of economics applications and want to share their discoveries.
Friday, July 27, 2018
Non price determinants play important roles
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