Question

Explain any three determinants of market demand.

Answer 1

1. Population:
   • Increase in population increases the demand or vice-versa. Market demand for so many commodities has increased in India due to this factor. Several multinational companies are entering the Indian market due to its large size.
   • Like the size of population, its composition also affects demand. Composition of population means the distribution of population on the basis of sex, age, etc. A change in the composition of population has an effect on the nature of demand for different commodities. For example, increase in female population would increase the demand for cosmetics, sarees, etc. Likewise, if the composition of population goes in favour of children, then demand for toys, toffees, etc., will increase.
2. Season and Weather: The season and weather conditions also have an effect on consumer's demand. For example, demand for woollen clothes goes up during winter. Fans, coolers, etc., are demanded more during summer. Similarly, in the rainy season, umbrellas and raincoats are in great demand.
3. Government Policy: Government policy of a country can also affect the demand for a particular commodity or commodities. It may reduce the demand for a commodity by imposing tax on it or increase the demand by lowering its price through subsidies.