What is the demand? What are the factors affecting the quantity demanded? How do these factors affect the quantity demanded?
Demands are the quantity of goods or services that consumers are willing and able to purchase at a certain price. The amount purchased by the Consumers at a certain price is called quantity demanded. Quantity demanded has an indirect relationship with the price of the goods. When the price of the goods increases, the quantity demanded decreases. Aggregate demand is the total demand for all the goods and services.
There are various factors that affect the quantity demanded. These are:-
1. Price of the goods or services:- Quantity demanded has an inverse relationship with the price of the goods or services. When the price of the goods increases, there is a decrease in the quantity demanded and vice versa.
2. Income of the consumer:- Demand for the goods or services are affected by the income of the consumers. When there is increase in the income of the consumer, the quantity demanded for the goods increases because Consumers have more money in their hand to spend on goods and when the income of tge consumers, the quantity demanded for the goods decreases.
3.Tastss and preferences:- When there is change in the taste and preferences of the consumer for the goods then it has direct impact on the demand for the goods. If the commodities are in fashion and trend, then the demand is high but the demand decreases when the consumer changes their taste.
4. Expectations of change in the price of the goods in the future:- when it is expected that the price of the goods or services would increase in tge future then the demand for that goods increases in the present vecause consumers buy more than they normally buy to avoid paying higher prices and when it is expected that the fiture price would decrease then the demand for goods will decrease in the present.
5. Prices of the related goods:- Price of the related goods also have impact on the demands for the goods and services. When the price of the substitutes goods decreases , the demand for the given goods decreases because consumers would want to purchase the substitue goods and vice versa.