Question

Explain how quantity demanded for commodity X will be affected by Government policy.

Answer 1

The demand for commodity X will change depending on government policy. If the government levies taxes on commodities in the form of sales tax, excise duty, VAT, and so on, the price of these commodities will rise. As a result, the demand for this commodity will decrease. However, if the government spends more money on road and bridge construction, industrial development, and so on, the demand for cement, iron, and other items required for these purposes would rise, as will the price of this commodity if it is on the list.