Question:medium

Explain six factors that affect market demand for a commodity.

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Demand determinants: own price, related-goods' prices, income, tastes, number of buyers, expectations.
Updated On: Sep 23, 2026
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Solution and Explanation

Step 1: Organise the six factors as "own-good" vs "outside" influences:
Own-good influence: its own price. Outside influences: related goods' prices, income, tastes, number of buyers, and future expectations — each shifts the whole demand curve rather than just moving along it.

Step 2: Illustrate each with a quick real-world example:
(i) Petrol price falls → more petrol bought. (ii) CNG price rises → more petrol demanded instead (substitute effect). (iii) Car price rises → less petrol demanded too (complement effect). (iv) Average income rises → more demand for cars (normal good) but less for second-hand/coarser alternatives (inferior good). (v) A popular ad campaign → demand for a snack brand rises even at the same price. (vi) More young drivers enter the market → total petrol demand rises. (vii) People expect fuel prices to rise next month → they fill up more today.

Step 3: Note the graphical distinction:
Only a change in the good's OWN price causes movement ALONG a fixed demand curve; all five other factors cause the entire demand curve to SHIFT (rightward for a demand-increasing change, leftward for a demand-decreasing one).

Final Answer:
Own price (movement along the curve) plus five shift factors — related-goods' prices, income, tastes, number of buyers, and price/income expectations — together determine market demand.
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