Determinants of Demand essays

Determinants of Demand essays In economics, we have learned that price is the major factor on the quantity demanded. Many decisions and results have often depended only on prices of goods and services. However, passages of time allow factors other than price to influence demand significantly. These factors are called the determinants of demand and they include consumer tastes and preferences, market size, income, prices of related goods, and consumer expectation. Change in any one of theses determinants can cause a change in the overall demand of a good or a service. Changes in consumer tastes and preferences can have a major impact on demand for products. For example, if BMW has a new model of the 7 series that is just released, the popularity of the car will be high and thus making an increase on the demand of the product. After a period of time, especially new car models are released quite often, the tastes and preferences of the 7-series might dropped and thus causing a decrease on the demand. There is a direct relationship between the consumer tastes Changes in the market size tend to affect demand. As a market expands, it more consumers thus creating a larger potential on demand. An opposite relationship goes along if the market contracts. Markets expand and contract for several reasons. Decisions by private business are one cause of changes in market size. For example, private business like BMW can spend a great deal of money on advertising their new 7-series model on television national wide. With its effect, more people know about the new product and thus likely to enlarge the market size because there is a higher demand. Government sometimes makes decisions that would affect market size. For example, government that puts high taxes on imported cars will cause market size of imported cars to contract. Lastly, new technology is also a force that would affect market size. The new technology is making more inve...