HOW TO IDENTIFY FACTORS AFFECTING DEMAND OF YOUR GOODS AND SERVICES (ECONOMICS)

The following are the main factors determining, affecting or influencing the demand for a goods or services as explained below:

Price of the Good or Service: Consumers usually react to the price of a good or service or service. When the price is lower, they demand for higher quantities and when the price is higher, they demand for lower quantities

Prices of other Commodities: This factor affects the goods that are close substitutes. A change in the price of one by way of increase or decrease will cause the demand for others to change by way of increase or decrease respectively

Expectation of Future Change in Price: An expectation of future change in price either positively or negatively will determine the quantity of a good that will be demanded as consumers like to avoid paying a higher price for good that they can obtain at a lower price in one way or the other.

Government Policy: The current policy of the Government can influence or affect the demand for a commodity. For instance, the policy of Government on taxation may be one that will encourage an increase in the tax rate or a decrease in the tax rate. The former will ultimately limit the demand for a commodity while the latter will enhance the demand for a commodity.

Taste, Preference and Fashion: Taste and preference differ from one person to person. The taste and preference of a person will therefore influence the demand for a commodity by that person. In addition, fashion changes from time to time.

Changes in the Size, Structure of Population: A change in the size and structure of the population in a society will lead to a change in the demand for certain commodities. Increase in the population will lead to increase in the demand for certain goods.

Variation in Weather and Climate: Weather and Climate are not fixed; they can change from time to time in a society. The present weather and climate will determine the demand for certain commodities. For instance, during the rainy season, there is often an increase in the demand for sweater and Cardigan. Likewise, during the dry season, there is usually an increase in the demand for air conditioners, fans, cold soft drinks and so on.

Change in Income: An increase in the income of a consumer will motivate him to increase his demand for a particular commodity while a decrease will result to the otherwise.

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