Answer to Question #231717 in Microeconomics for Hazel

Question

Factors that determine changes in demand.

Answer 1

Here are the more detail of those factors, you can use these also.

These factors are:

1. The Product's Cost

The price of the product and the volume of that thing that consumers are willing and able to buy have an inverse relationship. Consumers prefer to purchase more of a low-cost goods and less of a high-cost product. The Law of Demographics refers to the inverse relationship between price and the amount of money customers are willing and able to spend.

2. Earnings of Consumers

The impact of money on the amount of a product that consumers are willing and able to purchase varies depending on the type of product. For most things, there is a positive relationship between a consumer's wage and the amount of the good they are willing and able to buy. To put it another way, as income rises, so does demand for these things; as income falls, so does demand. Normal goods are what we refer to these types of items.

A shift in income, on the other hand, has the opposite effect for some commodities. Consider ground beef that is of poor quality (because to its excessive fat content). This is a good option if you're a student because it's less expensive than other meats. However, if your wealth rises sufficiently, you may decide to cease purchasing this sort of meat and instead purchase slimmer portions of ground beef, or perhaps abandon ground beef altogether in favour of beef tenderloin. There will be an inverse link between your income and your demand for this type of meat if this were the fact (that as your income increased, you were keen to purchase less high-fat ground beef). This type of good is referred to as an inferior good. When it comes to substandard items, there are two things to keep in mind. They aren't always of poor quality. The phrase inferior simply means that the demand for a good is inversely proportional to one's income. Furthermore, whether a good is typical or inferior differs from person to person. For you, a product might be adequate, but for someone else, it might be inadequate.

3. Related Goods' Prices

The impact that this would have on the amount that one is ready to purchase is similar to the effect that income has on the amounts that one is willing and able to purchase. Consider two items that are frequently consumed in tandem. Bagels with cream cheese, for example. Compliments are what we name these kinds of commodities. We will be willing/able to buy fewer bagels if the price of a bagel rises, according to the Law of Demand. However, we'll want to use less cream cheese if we want fewer bagels. As a result, if bagels become more expensive, we will buy less cream cheese. to recap, when two items are complementary, the price of one good and the demand for the other good have an inverse connection.

some things, on either hand, are considered substitutes for each other: you don't eat both of them at the same time, but rather pick between them. coca-cola and pepsi are, for example, replacements for certain people. if coca-price cola's rises, pepsi may become more appealing. According to the Law of Demand, fewer people will buy Coke; but, some of these people may move to Pepsi, increasing the amount of Pepsi that people are ready to purchase. To conclude, there is a positive link between the price of one commodity and the demand for the other good when two goods are substitutes.

4. Consumers' Tastings and Preferences

Although this is a less physical thing, it can nonetheless have a significant impact on demand. There are a variety of factors that might alter a person's tastes or preferences, causing them to want to purchase more or less of a product. For example, if a celebrity supports a new product, the demand for that product may increase. On the other side, if a new health study claims that something is harmful to your health, demand for the product may fall. Another example is that on a wet day, a person's demand for an umbrella may be higher than on a sunny day. 

5. Expectations of the Consumers

It's not only about what's going on right now; one's hopes for the future might have an impact how much of a commodity one is ready to buy. For example, if you hear that Apple is about to release a new iPod with more memory and better battery life, you might decide to wait until the new product is out before purchasing an iPod. People who elect to wait reduce present demand for iPods in anticipation of what they predict to occur in the future. Similarly, if you anticipate that the price of fuel will increase tomorrow, you should fill up your car now. As a result of what you predict to happen tomorrow, your gas demand has grown today. This really is similarly to what occurred in the aftermath of Hurricane Katrina in 2005. Gas stations began to run out of gas, according to rumours. As a result, many customers chose to fill up their automobiles, resulting in long lineups and a surge in gas demand. All of this was predicated on what was expected to occur.

6. The Market's Total Number of Customers

The quantity of a commodity that consumers are willing and able to buy changes as more or fewer consumers enter the market. During the fall and spring semesters, for example, a pizza business near a university will see increased demand and thus revenues. Because the number of consumers in the area has reduced dramatically over the summers, when fewer students are attending classes, demand for their goods will decline.