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What are five factors that influence demand?

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Answered 2014-06-11 17:53:15

The five factors that influence demand are:

  1. income
  2. prices of related goods
  3. tastes
  4. expectations
  5. number of buyers

More information for factors that influence demand:

1. Number of consumers (naturally, more consumers means more demand)

2. Income & normal goods (as income increases, demand for these goods increases)

3. Income & inferior goods (as income increases, demand for these goods decreases)

4. Preferences (obviously, if they prefer to buy it their demand will increase)

5. Price of a substitute (if the price of a substitute good increases, demand for the original good will increase)

6. Expectation of future prices and income.

7. Government policies. e.g. ban pornography. This leans more towards supply restriction rather than demand.

8. Substitutes (Greater the number of substitutes and the attractiveness of their price, the smaller will be the demand for the good)

9. Complement goods (increase demand for cars would raise demand for petrol)

10 fashion (if item is currently popular in the market it will get more buyers and so it would be a high demand item

11. weather ( a winter cloth would be in greater demand in winter as compared to summer)

12. wars (demand of certain goods can be influenced in wars compared to peace situation

13. traditional and religious festivals and events can influence the demand of certain goods, like Christmas tree is in higher demand in the month of December

14. number of sellers also impact demand by influencing the price of certain goods.

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