12 Determinants of Demand In Consumer Behavior

Learn about the key determinants of demand and how they can impact consumer behavior and market trends. Understand the factors that influence demand and make informed business decisions.

Demand is the amount of goods purchased or requested at a certain price and time. While supply is the amount of goods sold or offered at a certain price and time. It can be said that the one who acts as a request is a buyer or consumer. While the one who offers is a seller or producer. When a transaction occurs between a buyer and a seller, both will agree so that a transaction occurs at a certain price resulting from the bargaining process.

You Must Know Determinants of Demand In Consumer Behavior And In Economy of The Country.

The demand for a variable factor depends on:

  1. Price of Input:

The highest the price of a factor the smaller the demand for its services.

  1. MPP:

The marginal physical product of that factor which is derived by the production function.

  1. Price of Commodity:

The price of the commodity produces by the factor. Recall that the VMPL is the product of the MPPL times the price of the commodity Px.

  1. Collaborating Factors:

The amount of the other factors which are combined with labour. An increase in the collaborating factors will shift the MPPL outwards to the right and hence will raise its VMP curve

  1. Prices of Other Factors:

The price of other factors since these prices will determine their demand.

  1. Technological Progress:

Technological progress changes the marginal phsyical product of all inptus and hence their demand.

7. Trends or public tastes

Consumer taste is one of the main factors that influences demand for goods or services.

For example, at one time people like to consume herbal products because they are considered safer. However, at another time people may abandon herbal products because they are too expensive and do not provide much efficacy.

8. There are substitute goods and complementary goods.

The availability of substitute goods and complementary goods are also factors that influence demand.

9. Income level

When people’s income increases, the amount of money in circulation will increase, which will have an impact on increasing demand.

This also applies vice versa, if people’s income decreases, then consumption activity will decrease so that demand for products will also decrease.

10. Population

The increasing population growth, the increasing demand for the goods. Especially if it is a basic necessity.

On the other hand, if the population of an area tends to be small, then the tendency for demand for consumer goods is not very high.

11. Price of goods

The price of a product can be a factor that influences demand. High price factors usually make people think twice before making a transaction.

If the price of goods is cheap and affordable, generally demand will be high because price is the main consideration in the eyes of consumers.

Population

Population can greatly affect the level of demand for goods/services. A large population will increase the demand for goods/services to meet the needs of the community. Likewise, if the population is small, the amount of demand will be low.

The determinants of demand play a vital role in shaping consumer behavior and influencing market trends.