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What are the determinants of demand? Explain.

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Following are the determinant of demand.

(i) Income of the consumer : The effect of change in Income on the demand depends on the Nature of commodity. 

Normal Goods: If Income Increases the demand for normal goods Increases. ... 

Inferior goods : Their demand falls with an increase in the income.

(ii) Prices of related goods: 

Substitute goods: There is a direct (positive) relationship between the price of a good and demand of its substitute goods. If the price of coffee increases, its demand will fall and people will start consuming its substitute-tea.  

Complementary goods : There is a negative or inverse relationship between the price and demand of complementary goods. If the price of sugar increases, demand for tea will decrease. 

(iii) Tastes - If there is a favorable change in taste, demand will increase and the demand curve shifts rightwards and vice-versa. 

(iv) Expectations: If the expectation is for the prices to rise in future, then there is increase in demand and if the expectation is for the prices to fall in future then there is fall in demand.

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