Define demand. Name the factors affecting market demand.

Solution

Demand of a commodity is ability and desire to purchase a certain quantity of goods at a given price.
(i) Income of consumers: When the income of a consumer rises, the demand of normal good also rises while the demand for inferior goods decrease with an increase in income.
(ii) Tastes and Preferences: Other factors being constant, if any change prevails in the tastes and Preferences of a consumer, then the demand for such goods will increase leading to shift in demand curve for those goods as compared to goods have no preference.
(iii) Substitute Goods: When there is an increase in the price of a good like - coffee, then demand curve for its substitute tea shifts to the right as people will start consuming more tea than coffee.
(iv) Complementary goods: Those goods which are together used to satisfy the demand are called complementary goods such as Pen & Refill, Petrol and Scooter, An increase in the price of petrol leads to fall in the demand of scooter.