Explain six factors that affect market demand for a commodity. (2024)

Market demand for a commodity is affected by the following factors: i Price of the commodity: When price of the commodity increases in the market its quantity decreases and vice-versa. ii Income of the consumer: Market demand for a commodity is directly related to income of the consumer. Increase in income of consumer causes increase in market demand for the commodity. iii Prices of related goods: In case of substitute goods demand for a commodity falls with fall in price of the substitute commodity. In case of complementary goods market demand for the commodity rises with a fall in the price of complementary commodity. iv Tastes and Preferences: If consumers tastes and preferences change quantity demanded of the commodity will also change. v Income Distribution: If income distribution is even market demand for the commodity will be more than otherwise. vi Size of Population: Higher population implies greater market demand for goods and services and vice-versa.