FACTORS INFLUENCING DEMAND(Determinant of Demand):

The determinants of demand It is fairly obvious so far that the price of a good is a pretty strong determinant of its demand, but there are many other things that will affect demand too.

1. Price of Goods: More quantity is demanded at a lower price & less quantity is demanded at a higher price. It means Price & quantity demand for goods are inversely related to each other.
2. Real income. If one's real income rose the different goods & services also rose & vice versa.
3. The price of Substitute goods. If the price of substitutes goods increases then demand for original goods also increases & vice versa. For example if price of Coca Cola increases then demand for Pepsi will also increases & vice versa.
4. Tastes and preferences. Changing preferences will affect your demand for a product regardless of its price. If the product it at par of ones taste & preference then there will be more demand & vice versa.
5. Expectations of future prices. If a person think that the price for a good is likely to fall in the near future, he may delay some purchases which will reduce demand in the current time period. Alternatively, he may feel that prices are likely to rise in the near future, so he may increase the demand in the current time period.
6. Advertising. An effective advertisement create more demand in the market & vice versa.
7. Population. Quite obviously, a significant rise in the number of people in a given area or country will affect the demand for a whole host of goods and services. Note that a change in the structure of the population (we have an ageing population) will increase the demand for some goods but reduce the demand for others.
8. Interest rates and credit conditions. If interest rates are relatively low then it is cheaper to borrow money that can then be spent, so demand will increase but if interest rate increases then it will be costlier to borrow, hence the demand will decrease.