Question

Explain any three determinants of demand for a commodity by a household.

Answer 1

1. Price of the Commodity: The most important determinant of the demand for a commodity is the own price of the commodity. Normally, there is an inverse relationship between the price of the commodity and its quantity demanded.
2. Income of the Consumer: Income of the consumer is the basic determinant of the quantity demanded of a product as it determines the purchasing power of the consumer.
3. Consumers' Tastes and Preferences: The level of demand is influenced also by the tastes and preferences of the consumers. Tastes and preferences depend on social customs, habits of the people, fashion, general lifestyle of the people, advertisement, new inventions, etc.