Demystifying Demand

Demand is the effective desire for a specific commodity, accompanied by the ability to pay for it, willingness to spend on it, and the availability of the commodity at a particular price, time, and place. The prerequisites that must be satisfied to fulfill demand include the desire for a specific commodity, ability to pay or sufficient resources to purchase the desired commodity, willingness to spend on the commodity, and the availability of the commodity at a particular price, time, and place.

The demand determinants that affect the demand for a commodity include the price of the commodity, income of the consumer, price of related goods, taste and preference of the consumer, growth of population, government policy, climatic conditions, income distribution, expected change in price, and future expectations about income.

Normally, the quantity demanded of a commodity varies inversely with its price, ceteris paribus. As the price of a commodity rises, the quantity demanded of it falls, and as the price of the commodity falls, the quantity demanded of it rises.

<p>The demand for a normal good varies directly with the income of the consumer, ceteris paribus. A change in the income of the consumer brings about changes in the demand for a normal good, with demand increasing as consumer income increases, and decreasing as consumer income decreases.</p> Signup and view all the answers

<p>Some important determinants of demand mentioned in the text include the price of the commodity, income of the consumer, price of related goods, taste and preference of the consumer, growth of population, government policy, climatic conditions, income distribution, expected change in price, and future expectations about income.</p> Signup and view all the answers