MAJOR FACTORS THAT COULD AFFECT THE ELASTICITY OF DEMAND FOR A COMMODITY

By the elasticity of demand for a commodity we mean the change in the quantity bought of that commodity as a result of a change in the price of that commodity.

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The elasticity of demand for a commodity could be affected by the availability of substitutes for the commodity in question. Goods within a particular class are easily substituted for one another, while such a substitution is more difficult between classes of other goods. For instance, the elasticity of yam could be affected by the availability of cocoyam. If the price of yam is considered high at a given period of the year, the demand for yam therefore tends to fall if a close substtute like cocoyam, is available, So also, it the price of beef appears too high, the demarnd for it wouid fall with the availability of fish particularly, the frozen fish which could be got cheaply almost any where in West Africa. However, if the price of meat in general falls, there will be a slight tendency to buy more meat and less fish, but tendency will be very much limited since meatis not nearly so perfect a substitute for fish as beef is for mutton

Another factor that can affect the elasticity of demand for a commodity is the number of possible uses to which it can be put. The demand for a good tends to be elastic if the good can be put into two or more uses. The more the number of used a particular good can be put into the more elastic is it's demand likely to be . For instance if commodity X could be used for two or more purposes, the more irresponsive to price increases the demand is likely to be.

AIso the elasticity of demand for a commodity could be affected by the proportion of income spent on the good. If the proportion of one's income spent on a good is very small, an increase in the price of such a good may not put the consumer off the track of purchasing Such a good. In most cases, people spend very small proportions of their incomes on such goods as tea, sugar, milk, salt, pomade, shoe polish toothpaste and the like. So an increase in the prices of these goods does not give the consumer the incentive to look for substitutes for such goods, and therefore, the demand for such goods tends to be inelastic. On the other hand, when the expenditure on a good is fairly large, an increase in the price of such a good tends to give the consumer the incentive to look for substitutes. The demand for such a good is therefore elastic since the purchase of its substitutes reduces the quantity of it demanded.

Time lag Is another factor that can affect the elasticIty of demand for a commodity. In the short-run, a fall in the price of a commodity may have little or no effect on the quantity of it that is bought. This may be because it could take some time before all consumers become aware of the change in price. And even if consumers are aware of the prices they may have the belief that the price is likely to fall
Further and therefore defer their purchases till a future time. The
demand for the commodity whose price has fallen tends to remain changed and therefore its elasticity is zero in the short-run, but could be elastic in the long-run