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Question
Explain any three factors that affect the demand for a commodity.
Answer in Brief
Solution
Three determinants of demand:
- Price of the commodity: With constant money income for the consumer and an increase in the price of a commodity, the purchasing power of the consumer reduces and vice versa. Thus, the consumer purchases less of a commodity with an increase in its price.
- Income of the consumer: Other things remaining constant, an increase in the individual income would mean an increase in the purchasing power of the consumer. Thus, the consumer can purchase commodities with an increased income.
- Climatic condition: During the winter season, the demand for woollen clothes increases. During the summer season, the demand for cotton clothes increases. Hence, the climatic condition affects market demand for a commodity.
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Determinants of Demand Or Demand Function
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