Question

State any two factors on which demand for a commodity depends.

Answer 1

Two factors on which demand of commodity depends are:-

1.Price of related goods:

a. Substitute Goods:

when the price of substitute goods increases the demand of the given commodity increases and vice versa. Example : tea and coffee , when price of tea increases demand for coffee increases and vice versa.

b.Complementary Goods:

when the price of complementary goods increases ,the demand of the given commodity decreases and vice versa. Example car and petrol, if the price of car increases demand for petrol decreases.

2. Income of the consumer:

As the income of the consumer increases ,his purchasing power increases and therefore the demand of the given commodity increases. Similarly, when the income of the consumer decreases,his purchasing power contradicts and hence the demand of the given commodity decreases.