There are some factors of economics (price,income,inflation,etc.) which control the demand and supply of a goods but it has also a major role which influnce the buying behaviour of a customer.
According to purchasing power of the customers they buy different goods.
A rational customer always compare the goods and analyze the cost benefit analysis and choose one product and leave another and whats he give up for getting the best alternative that is called opportunity cost. By elasticity of demand we can know the % change in demand with % change in the factors of the demand. From all the factors, change in price and income influence the buying behaviour of the customer.
Price
According to law of demand when price increases demand of the particular product decreases and vice versa. But it acts differently for different type of product. For example price of a generally or frequently use product(rice ,wheat, fmcg) will increase then consumption of such product will decrease. But for rarely use product like medicines consumer durables are not affected to the customer that much if price of the product increase.
Income
Income of the customer also influence the buying behaviour of the customer.Resources are limited but human needs and wants are unlimited so rational customer allocate their money in different necessity goods according to price .
Example: if there are two necessity things of a consumer like food and cloth at that time he has to decide how much amount he has to spend on which product so that he can get different quantity of both product. => total spend = price of cloth*quantity + price of food*quantity so if he want to buy more food then he has to sacrifice some cloth and vice versa .
So if income of the person will increase then the demand of quality goods and costlier good will increase and demand of cheaper goods and less quality goods will decrease.
If income will decrease then demands of the basic needs will increase and demand of other costlier goods will decrease.
According to purchasing power of the customers they buy different goods.
A rational customer always compare the goods and analyze the cost benefit analysis and choose one product and leave another and whats he give up for getting the best alternative that is called opportunity cost. By elasticity of demand we can know the % change in demand with % change in the factors of the demand. From all the factors, change in price and income influence the buying behaviour of the customer.
Price
According to law of demand when price increases demand of the particular product decreases and vice versa. But it acts differently for different type of product. For example price of a generally or frequently use product(rice ,wheat, fmcg) will increase then consumption of such product will decrease. But for rarely use product like medicines consumer durables are not affected to the customer that much if price of the product increase.
Income
Income of the customer also influence the buying behaviour of the customer.Resources are limited but human needs and wants are unlimited so rational customer allocate their money in different necessity goods according to price .
Example: if there are two necessity things of a consumer like food and cloth at that time he has to decide how much amount he has to spend on which product so that he can get different quantity of both product. => total spend = price of cloth*quantity + price of food*quantity so if he want to buy more food then he has to sacrifice some cloth and vice versa .
So if income of the person will increase then the demand of quality goods and costlier good will increase and demand of cheaper goods and less quality goods will decrease.
If income will decrease then demands of the basic needs will increase and demand of other costlier goods will decrease.
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