The following points highlight the six important factors on which an individual demand depends.

The factors are: 1. Price of the Commodity 2. Income of the Purchaser 3. Person’s Taste’s and Habits 4. Substitutes and Complementary Products and their Relative Prices 5. Consumer’s Expectation About the Future Change in Price 6. Effects of Advertisement and Sales Propaganda.

Factor # 1. Price of the Commodity:

Price is always a basic consideration in determining the demands for a commodity.

Normally, it has been seen that a larger quantity is demanded at a lower price than at a higher price.

Factor # 2. Income of the Purchaser:


Income is an equally important factor of demand. When there is increase in income, one can buy more goods. Thus, a rich consumer usually demands more goods than a poor consumer.

Factor # 3. Person’s Taste’s and Habits:

It has been observed that demand for many goods depend on the person’s taste’s, habits and preference. Demand for several products like ice-cream, chocolates, cold drinks etc., depend on an individual’s tastes. Demand for tea, betel tobacco etc., is a matter of habit.

Factor # 4. Substitutes and Complementary Products and their Relative Prices:

Next important thing to keep in mind is as to how much the consumer would like to buy of a given commodity depends on the relative prices of other related goods such as substitutes or complementary goods to a commodity.

When a want can be satisfied by alternative similar goods they are called substitutes. For example—Peas and beans, ground nut oil and ’til oil’, tea and coffee, jawar and bajra etc., are substitutes of each other.


The demand for a commodity mostly depends on the relative price of its substitutes. If the substitutes are relatively more costly, then there will be more demand for this commodity at a given price than for its substitutes.

Similarly, the demand for a commodity is also affected by its complementary products. When in order to satisfy a given want, two or more goods are needed in combination, these goods are referred to as complementary goods. For example—Car and Petrol, Pen and Ink, Tea and Sugar, Shoe and Socks, Guns and Bullets etc., are complementary to each other. Complementary goods are always in joint demand.

Thus, a given commodity is a complemen­tary product, its demand will be relatively high when its related commodity’s price is lower than otherwise, or, when the price of one commodity decreases the demand for its complemen­tary product will tend to increase and vice-versa. For example—A fall in the price of cars will lead to an increase in the demand for petrol. This is because when more cars are purchased more petrol will be needed.

Factor # 5. Consumer’s Expectation About the Future Change in Price:

Sometimes, the consumer’s expectations about the future changes in the price of a given commodity may affect its demand. When he expects its prices to fall in future, he will tend to buy less at the present prevailing price. Similarly if he expects its price to rise in future, he will tend to buy more at present.

Factor # 6. Effects of Advertisement and Sales Propaganda:


In modern times it has been seen that the likings and preferences of a consumer can be altered by advertisement and sales propaganda. Thus, the demand for many products like tooth-paste, toilet soap, washing powder, processed foods etc., is partially caused by the advertisement effect in a modern man’s life.