Law of Demand , Factors affecting Demand

               Law Of Demand 

The law of demand States that " As the price of a commodity ( good ) increases then the demand of that commodity decreases and vice versa while other things remain constant . "

                   In other words the demand curve as a function of price and quantity , is always downward sloping . 

       Factors affecting Demand 

There are some important factors which affect the demand of a good - 

1- Price of commodity 

2- Price of the related good 

3- Income of consumer 

4- Taste and preferences 

5- Climatic conditions 

6- Expectation of change in the price in future 

7- Quality / Durability of product 

1- Price of the Commodity :- It is the most important factor affecting Demand for the given commodity . Generally as price increases , quantity demand falls due to increase in the satisfaction level of consumer . 

2- Price of related Goods :- Demand for the given goods is also affected by change in prices of the related goods . Related goods are of two types -

1- Substitute goods 

2- Complementary goods

* Substitute goods - Those goods which can be used in place of one another for satisfaction of a particular want , like tea and coffee are known as substitute goods .                                                           For example if price of a coffee increases , then demand for tea will rise . 

* Complementary Goods - Those goods which are used together to satisfy a particular want like tea and auger are known as complementary goods .                                                                       For example if price of sugar increases , then demand for tea will fall as it will be relatively costlier to use both the goods together . 

3- Income of consumer :- Demand for a commodity is also affected by income of the consumer . The effect of change in income on demand depended on the nature of the commodity discussed below -  

- If the given commodity is a normal leads to rise in its demand , while a decrease in income reduces the demand . 

- If the given commodity is a inferior good , then an increase in income leads to. rise in demand . 

4- Tests and Preferences :-  Tests and preferences of the consumer directly influences the demand for a commodity . They include changes in fashion , customs , habits ect . If a commodity is in fashion or is preferred by the consumers , then demand for such a commodity rise . On the other hand , demand for a commodity falls , if the consumer have no taste for that commodity . 

5- Climatic Conditions :- The demand of the consumer also depends upon the climate conditions of that place .               Ex - If the climate over there is hot then there will be no need of woolen clothes in the particular region otherwise there will be need of woolens . 

6- Expectation of Change in price in future :- If the price of a certain commodity is expected to increase in near future , then people will buy more of that commodity that what they normally buy .                                                          For example , if the price of petrol is expected to rise in future , it's present demand will increases . 

 7- Quality / Durability of Product :- Quality refers that the durability of that product for which the consumer paid an amount .                                                          The quality of product also effect the demand of that product .