Mention any four factors other than price of the commodity which affect the demand for that commodity

Answer :

Four factors other than price of the commodity that influence the demand for the commodity are as follows:

1. The price of substitute goods.

2. Income of the consumer.

3. Tastes and preferences of the consumers.

4. Consumer’s expectations with regard to future prices.

To read in detail - Factors affecting demand

How does demand differs from desire

Answer :

Though both terms desire and demand can be used interchangeably but in economics, they both are different. If we say you desire to have a car, but you do not have enough money to buy it. Then this desire will be just a wishful thinking, it will not be called demand. And also if you have enough money but you are not willing to spend it on car, demand does not emerge. The desire becomes demand only when you are ready to spend money to buy car.

Thus demand for a commodity refers to the desire to buy a commodity backed with sufficient purchasing power and willingness to spend. In other words, demand is an effective desire, a desire accompanied by the will to purchase and the power to purchase.

Factors affecting Price Elasticity of Demand

It is important to know that demand for some goods is more elastic (e_p>1, percentage change in quantity demanded is more than percentage change in price) while for others it is less elastic (e_p<1, percentage change in quantity demanded is less than percentage change in price), depending on many factors.

Some of the important determinants of price elasticity of demand are:

1) Nature of commodity :

Nature of commodity refers to whether the commodity is ‘necessary’, ‘luxury’ or ‘comfort’ in nature.

‘Necessary’ commodities, such as food items are essential for existence, these goods have to be purchased in fixed quantities, whether the price is high or low.

A change in the price of the necessities may have a small impact on the demand i.e. have inelastic demand (e_p<1).

‘luxury’ or ‘comfort’ commodities, such as television, a.c, furniture etc are not necessary for existence and their consumption can be postponed. Thus their demand changes by larger amount due to a small change in price i.e. have elastic demand (e_p>1).

The demand for necessities is inelastic and the demand for luxuries and comforts is elastic.