Factors Affecting Demand (Demand) – According to Danniel (2004), demand is influenced by several factors, which include the price of the goods concerned, prices of substitute or complementary goods, tastes, population, and income levels.

Factors Affecting Demand (Demand)
Factors Affecting Demand (Demand)

Things that affect the level of individual demand (Demand) for goods and services include the following:

1. The price of the item itself

The relationship between price and demand is a negative relationship. The price of the good will affect the quantity demanded of the good. This means that if one goes up, the other will go down and vice versa if the price goes down, the quantity demanded of goods will increase.

2. Prices of other goods or substitutions (substitutes)

The price of substitute goods and services also affects the quantity of goods and services demanded. If the price of substitute goods is cheaper, people will switch to the substitute goods. However, if the price of substitute goods increases, people will continue to use the original goods.

A change in the price of one good will affect the demand for other goods. Prices of other goods may include the prices of substitutes, complements, and independent goods. One example of substitute goods, when the price of coffee rises, usually the demand for tea will rise. Complementary goods such as bread with cheese. If both are used simultaneously so that when one of the prices of the goods increases, in general it will affect the consumption of the complementary goods. Independent goods are goods that are not affected by the price of other goods.

3. Prices of complementary goods (complementary)

Complementary goods can also affect the demand for goods/services. For example, motorcycles, the complementary goods are gasoline. If the price of gasoline rises, the tendency of people to buy motorcycles will decrease, and vice versa.

4. Total Income

The more the population, the greater the goods consumed and the higher the demand. The increase in population means a change in the age structure. Thus, the increase in population is not proportional to the increase in the number of goods consumed.

Changes in income levels will affect the amount of goods consumed. Theoretically, an increase in income will increase consumption. As income increases, the goods consumed not only increase in quantity, but also increase in quality.

The size of the income earned by a person also determines the amount of demand for goods and services. If the income earned is high, the demand for goods and services will also be higher. Conversely, if the income decreases, the ability to buy goods will also decrease. As a result, the quantity of goods will decrease. For example, Mrs. Tia’s income from trading the first week of Rp. 200,000.00 can only be used to buy 20 kg of coffee. But when the second week’s trading results were Rp. 400,000.00, Ibu Tia was able to buy 40 kg of coffee.

5. Consumer tastes

Taste is a variable that affects the size of the demand. Consumers’ tastes and preferences for an item are not only influenced by the general structure of consumers, but also due to local customs and habits, education level, or other factors.

Consumer tastes for goods and services can affect the quantity demanded. If the consumer’s appetite for certain goods increases, the demand for these goods will also increase. For example, nowadays many people are looking for mobile phones equipped with music and game facilities, because consumer tastes for these goods are high, the demand for mobile phones equipped with music and games will increase.

6. The intensity of consumer needs

The intensity of consumer needs affects the quantity of goods demanded. The need for an item or service that is not urgent will cause public demand for the product or service to be low. Conversely, if the need for goods or services is very urgent, then public demand for these goods or services will increase, for example, with increasing rainfall, the intensity of the need for raincoats will increase. Consumers will be willing to buy a raincoat up to Rp. 25,000.00 even though in reality the price of a raincoat is Rp. 15,000.00.

7. Forecasting future prices

If consumers predict that prices will rise, consumers tend to increase the number of goods purchased because there are fears that prices will be more expensive. Conversely, if consumers predict that prices will fall, consumers tend to reduce the number of goods purchased. For example, there is an allegation that the increase in the price of fuel oil has resulted in many consumers queuing at the gas station (Public Fuel Filling Station) to get more gasoline or diesel.

8. Population

Population growth will affect the quantity demanded. If the population in an area increases, the goods demanded will increase.

The more the population, the greater the goods consumed and the higher the demand. The increase in population means a change in the age structure. Thus, the increase in population is not proportional to the increase in the number of goods consumed.

Reference :

  1. Daniel, Moehar. 2004. Introduction to Agricultural Economics. Jakarta: Earth Literacy.
  2. Gilarso, T. 2003. Introduction to Microeconomics. Yogyakarta: Kanisius.
  3. Suparmoko, Introduction to Microeconomics, BPFE Yogyakarta, 2000
  4. Farid Wijaya, Macroeconomic theory, BPFE. UGM, Yogyakarta 1999

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