Factors Affecting Market Demand

The factors affecting the market demand include all those factors that influence the individual’s demand, i.e,

• price of that good
• prices of substitute and complementary goods
• income of the consumer
• tastes, preferences and choices of the consumers
• other factors affecting individual's consumption decisions.

However, in addition to these factors, market demand is also affected by:

• Number of buyers in the market: Larger the number, bigger will be market demand.
• Income and purchasing power of the people: Merely large number of consumers is not enough; they must also possess sufficient income and adequate purchasing power.
• Income distribution in the society: A more equal distribution of income means everyone has some money to spend and higher will be market demand.
• Age and sex composition of population: A market with more females than males will have a different level and pattern of demand than the one with more males and less females. Similarly, a market with more young people will have different size and sale volume than the one which is predominated by the older people.