question_answer

Define demand. Name the factors affecting market demand.

Answer:

Demand: Demand for a commodity refers to the quantity of a commodity which a consumer. A" to buy at a given price and in a given period of time.

Factors affecting Market demand:

(1) Population: Increase in the population increases the demand.

Composition of the population also affects the demand. Composition of the population means the distribution of the population on the basis of sex, age etc. A change in the composition of the population has an effect on the demand of the commodity.

(2) Season and weather: The season and weather conditions also affect Consumers demand. Example: Demand for woolen clothes rises in winter season.

(3) Government policy: The government of the country can also affect the demand for a commodity through taxation and subsidies. It may reduce the demand for the commodities by imposing tax on it or increases by lowering the prices through subsidies.

(4) State of business: The prevailing business condition in a country also affects the level of demand. Level of demand increases during boom period while decreases during the period of depression.

(5) Distribution of income: If the national income is equally distributed, then the demand for the necessities will increase. If it is unequally distributed, there will be more demand for luxury goods.