Question

Explain any three determinants or factors affecting demand.

Answer 1

Three factors affecting demand are: 

1. Own price of the commodity: The price of a commodity determines its demand. There is an inverse relationship between a commodity's own price and its demand. When the price of a standard good rises, the quantity requested reduces, and vice versa.
2. Income of the consumer: Another key aspect influencing commodity demand is the consumer's income level. In the case of ordinary products, there is a positive link between consumer income and commodity demand, which indicates that commodity demand rises as income rises and falls as income falls. In the case of inferior commodities, however, there is a negative link between consumer income and demand for inferior goods. As a result, demand for inferior items reduces as income rises and rises as income falls.
3. Tastes and preferences of the consumer: Demand for a particular commodity depends based on customer taste and preference patterns, If consumer tastes and preferences shift in favour of an item, its demand will rise at all price levels. Similarly, a shift in consumer preferences towards an item reduces demand at all price levels.