We
discuss below some of the important determinants of demand for a commodity:
1) Price of the commodity:
Normally there is an inverse relationship
between the price of the commodity and the quantity demanded this means that
lower the price of the commodity, larger is the quantity demanded and higher
the price, lesser is the quantity demanded.
Price- rises , demand- falls
Price-falls , demand- rises
2)Income
of the consumer :
Income
determines the purchasing of the consumer. Generally there is a direct
relationship between the income of the consumer and his demand for a product.
Income- rises , demand- rises.
However, this may not always be the case. Let
see the relation between income and three different types of commodities
consumed.
a) Normal goods: normal goods are those goods the demand for
which increases with increase in income of the consumers and decreases with
fall in income for example demand for clothes, refrigerator, television, cars
etc.
Effect
of change in consumer’s income on normal goods
 |
| normal goods |
The above figure
shows the income of the consumer plotted on y-axis and the quantity purchased
of a commodity is plotted on x-axis. The nature of relation between income and
demand for normal goods is shown by OA curve.
