Factors determining the Demand for a Commodity: Following factors determine the demand for a commodity:

(i) Price of the Commodity: There is an inverse relationship between the price of a commodity and its demand if other things remain the same. When the price of the commodity falls, its demand rises and vice versa.

(ii) Prices of related Goods: Related goods are of two types: 

(a) Substitute goods. and 

(b) Complementary goods. 

Substitute goods are those goods which can be used in place of another whereas complementary goods are those goods which are used together to satisfy a want. There exists a direct positive relationship between the price and demand for substitute goods (tea and coffee) as shown in the diagram.

On the other hand there is a negative or reverse relationship between the price and demand of complementary goods. For example, we take pen and ink as complementary goods. If the price of pen increases, its demand will fall resulting in the fall in the demand of ink as it is used with it. It has been shown with the help of the diagram.

(iii) Income of the Consumers: There is a direct relationship between the income and demand for normal goods, i.e. demand for normal goods increases with the increase in income and vice versa. In case of inferior goods, there is an inverse relationship between the income and demand for goods. The demand for inferior goods falls with increase in income and vice versa.

(iv) Taste: Taste also affects the demand for a commodity. Favourable change in taste causes increase in demand and the demand curve shifts rightwards. But if there is unfavourable change in the taste, then the demand will fall and the demand curve will shift to the left.