Q.Explain the determinants of demand for a commodity.

Several factors, besides a commodity's own price, decide how much of it buyers are willing and able to purchase.

Demand for a commodity is influenced by several determinants beyond its own price. The price of the commodity itself is the single most important determinant, studied specifically by the Law of Demand. The consumer's income matters because demand for most (normal) goods rises as income rises, while demand for a few (inferior) goods falls as income rises. The price of related goods matters because a rise in the price of a substitute raises demand for the good in question, while a rise in the price of a complement lowers it. Tastes, preferences and fashion shift demand independently of price or income. Expectations of future price changes make buyers purchase more now if a further price rise is expected, or less if a further fall is expected. A larger population, or a larger share of consumers in the relevant age group, raises demand. A more equal distribution of income raises demand for mass-consumption goods, while a highly unequal distribution concentrates demand on luxuries. Government policy — taxes and subsidies — changes the effective price a buyer faces. Finally, effective advertising can shift preference toward a good and raise its demand even without any change in its own price.

Students often list only two or three determinants (usually price and income) and forget the others — a full-mark answer in the Maharashtra HSC (MSBSHSE) Economics exam is expected to cover most of the list with a one-line explanation for each.