Determinants of Demand

Determinants of demand are the factors that influence the demand for a product or service. They include:

1) Tastes and Preferences - People's preferences and tastes for a product or service can affect the demand for it. For example, if people prefer organic food, the demand for organic food will increase.

2) Income - The amount of income that a person or household has can affect the demand for a product or service. As income increases, people tend to buy more goods and services.

3) Price of Related Goods - The price of related goods can affect the demand for a product or service. If the price of a substitute good increases, people may switch to the original product, increasing its demand.

4) Availability of Substitute Goods - If there are many substitute goods available, the demand for a particular product or service may decrease.

5) Population Size - The size of the population can affect the demand for a product or service. As the population increases, so does the demand for products and services.

Determinants of Supply

Determinants of supply are the factors that influence the supply of a product or service. They include:

1) Cost of Production - The cost of producing a product or service can affect the supply of it. If the cost of production increases, the supply may decrease.

2) Availability of Resources - The availability of resources such as labor, raw materials, and capital can affect the supply of a product or service.

3) Technology - Advances in technology can increase the efficiency of production, which can increase the supply of a product or service.

4) Government Policies - Government policies such as taxes and regulations can affect the supply of a product or service.

5) Producer Expectations - The expectations of producers about future prices can affect the supply of a product or service. If they expect prices to increase in the future, they may hold back on supply, waiting for higher prices.