Livestock Economics, Marketing and Business Management

DETERMINANTS OF DEMAND

• Amount of a commodity or service that a consumer wishes to purchase is called as quantity demanded of that commodity or service.
• Purchase of this quantity is influenced by several factors, which are called as determinants of demand.
• The relationship between the quantity demanded and its determinants are expressed in the form of a functional equation known as demand function.
  • Q_d = f {P_i, P_j, Y, T, C, P, I...}
  • Where Q_d = Quantity demanded
  • P_i = Price of that commodity
  • P_j = Prices of related goods (substitutes and complements)
  • Y = Income of consumer
  • T = Tastes and preferences of consumer
  • C = Climate or weather
  • P = Size and composition of population
  • I = Income distribution of the society
• Thus the quantity demanded of a commodity is determined jointly by all these factors indicated.
• Changes in any one or two or more of these factors listed above would become the causes for the changes in demand.