IGNOU MCO 21 2026 - Define demand and discuss the major determinants of demand f

Question

Define demand and discuss the major determinants of demand for a consumer durable product. Using appropriate examples, explain how changes in income and prices of related goods influence demand decisions of a firm.

12 Feb 2026

Answer :

Word Count : 556

In managerial economics, demand refers to the quantity of a good or service that consumers are willing and able to purchase at various prices during a given period of time, other factors remaining constant. It is not merely a desire to own a product, but a desire backed by purchasing power and a readiness to spend. Demand is commonly expressed through a demand schedule or demand curve, which shows the inverse relationship between price and quantity demanded, assuming other determinants remain unchanged. For managerial decision-making, understanding demand is crucial because it directly influences production planning, pricing strategies, revenue forecasting, and profit maximization. For a consumer durable product such as a refrigerator, washing machine, television, or automobile, the major determinants of demand include income of consumers, prices of related goods, tastes and preferences, expectations about future prices and income, availability of credit, population size and composition, and advertising. Among these, income and prices of related goods play a particularly significant role in shaping demand patterns. Income is a primary determinant of demand, especially for consumer durables, which are generally considered normal or even luxury goods. As consumers’ income increases, their

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