Brief explain the three factors that affect demand of a commondity
1. Price: The most significant factor affecting demand is the price of the commodity. Typically, as the price of a commodity decreases, the quantity demanded increases, and vice versa. This relationship is known as the law of demand.
2. Income: Consumer income also plays a crucial role in determining demand. Generally, as consumer income increases, their purchasing power also increases, leading to a rise in demand for goods and services. Conversely, a decrease in income may lead to a decrease in demand.
3. Preferences and tastes: Changes in consumer preferences and tastes can have a significant impact on demand for a commodity. For example, if there is a sudden trend or shift towards healthier eating habits, the demand for organic produce might increase while the demand for processed foods might decrease. Consumer preferences can be influenced by a variety of factors such as advertising, trends, and cultural changes.