question_answer

Distinguish between individual's demand and market demand. Name the factors affecting demand for a good by an individual.

Answer:

Individual Demand - Individual Demand for a commodity means the quantity an individual is willing to buy at different prices in a given period of time.

Market Demand - Market Demand means the total demand of all the consumers the market taken together. It is the sum total of all the individual demands.

Factors affecting demand for a good by an individual:

(1) Price of a commodity itself (inverse relationship)

(2) Price of related goods:

2.1. Substitute goods (direct relationship)

2.2. Complementary goods (Inverse relationship)

(3) Income of the consumer

3.1. Normal goods (Direct relationship)

3.2. Inferior goods (inverse relationship)

(4) Taste and Preference of the consumer (Direct relationship).