The factors that influence the demand for goods are as follows:
- Price of the good: When the price of a commodity rises, its demand falls, and when the price falls, demand increases, assuming other factors remain unchanged.
- Income: An increase in income raises the demand for normal goods, while it reduces the demand for inferior goods.
- Consumer preferences: Changes in tastes and preferences affect demand. A favourable preference increases demand, whereas an unfavourable preference lowers it.
- Prices of related goods: Demand for a product is influenced by the prices of substitute and complementary goods.
- Future expectations: If consumers anticipate a rise in prices in the future, they tend to purchase more in the present, increasing current demand, and vice versa.
