Question

Describe five factors that influence the demand of agricultural products.

Answer 1

1. Price of related goods: demand of commodity increase with an increase in the price of a substitute
2. Population: the higher the population the higher the demand.
3. Income: income determine the purchasing power of buyers thus demand increases
4. Preferences and faster: consumers will buy more for what they liked/ preferred and low demand for what is substituted for.
5. Price expectation: demand for a certain good goes up if its price is expected to go up in future.
6. Advertisement: create awareness / increase sales hence increase in demand.
7. Belief, customs and taboos : -may forbid consumption of certain items e.g. fork for Muslims.
8. Level of taxation: highly taxed goods have price resulting to low demand.
9. Future expectation: fear of future shortage increase of commodities.