What is Market Demand? Factors Affecting Market Demand

What is Market Demand?


Market demand is similar to company demand. demand of a commodity by all consumers in the market is known as market demand.

If more buyers enter any market and have the ability to pay for the goods on sale, then market demand will increase.

Market Demand Schedule

It is a list which represents about how much quantity demand is demanded by all the consumers (A+B) in the market at different possible prices.

What is Market Demand? Factors Affecting Market Demand
What is Market Demand? Factors Affecting Market Demand

Factors Affecting Market Demand

1. Population

Population means how is the population of any market area, but how many people are there, if the size of the population of that area increases.

Then the demand will increase and if the people decrease at that place then the demand will go down there.

This means if demand increases then right ward shift and if demand decreases then left ward shift.

2. Government policy

How do government policies affect the demand of any market, then the government has two market tools, one is named tax and the other is named subsidy.

As soon as the government increases and decreases the tax on any commodity, then the price of that commodity will increase and decrease.

And if the tax of a commodity increases, then the price of that commodity will increase and the price will increase, then the demand will automatically decrease.

Example: Suppose the government tax on iron is increase, then the price of that commodity increases and the price of iron increases, then the demand decreases.

3. Distribution of income and wealth

How is the income and wealth distribution of any area, how much is the money of the people there.

If all the people in that area have money, no one is poor and rich, all are the same, then the demand of that market will be increase.

And if the area where income and wealth are not equal, there will be a poor and rich. then the demand of the rich people will be increase and the demand of the poor people will decrease.

Individual Demand

Demand of an individual buyer in market is known as individual demand.

Individual Demand Schedule

What is Market Demand? Factors Affecting Market Demand
What is Market Demand? Factors Affecting Market Demand

Difference Between Individual & Market Demand

Individual Demand

. It represents the quantity of a good that a single consumer would buy at specific price & at a specific point in time.

. It may not follow the law of demand, i.e. it is possible that a consumer may demand more even at higher price.

. Individual demand is not affected by all the factors affecting market demand.

Market Demand

. The total quantity demanded by all consumers of a particular commodity at a specific price & at specific point in time.

. It always follow the law of demand, i.e. market demand always falls with rise in price and vice-versa.

. Market demand is affected by all the factors affecting individual demand.

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