Some of the major factors affecting the demand in microeconomic: The Number of Consumers in the Market: When the price of a substitute for a good falls, the demand for that good will decline and when the price of the substitute rises, the demand for that good will increase. Suppose there is a decrease in the average income level of an entire economy; luxury items such as luxury cars and flat-screen televisions experience a high elasticity of demand.
Changes in the Prices of the Related Goods 4. The satisfaction of human wants is linked with the production of goods and services and their pricing process. Similarly, when the consumers expect that in the future the prices of goods will fall, then in the present they will postpone a part of the consumption of goods with the result that their present demand for goods will decrease.
Sometimes, the demand for a good might be influenced by prices changes of other goods. When as a result of the rise in the income of the people, the demand increases, the whole of the demand curve shifts upward and vice versa.
If there are adverse changes in the factors influencing demand, it will lead to the decrease in demand causing a shift in the demand curve. Implies that the different policies of government, such as fiscal policy and industrial policy, has a greater impact on the supply of a product.
We shall explain below in detail how these other factors determine market demand for a commodity. Price of the Given Commodity: Investment, employment and income increase. In drawing a demand schedule or a demand curve for a good we take incomes of the people as given and constant.
This would increase the supply of a product in the market. The demand for a good is also affected by the prices of other goods, especially those which are related to it as substitutes or complements. The goods which are complementary with each other, the fall in the price of any of them would favorably affect the demand for the other.
Advertisements for goods are repeated several times so that consumers are convinced about their superior quality. In such a case, the supply of his product would be 50kgs at Rs. Tea and Coffee are good substitutes. Therefore, when the prices of the related goods, substitutes or complements, change the whole demand curve would change its position; it will shift upward or downward as the case may be.
If the consumers substitute one good for another, then the number of consumers of that good which has been substituted by the other will decline and for the good which has been used in its place, the number of consumers will increase.
Substitute goods are those goods which can be used in place of one another for satisfaction of a particular want, like tea and coffee.
Price is a very important factor, which influences demand for the commodity. Tea and coffee are very close substitutes.
The demand for goods also depends upon incomes of the people.
On the other hand, if the tax rate is low, then the supply of a product would increase. Tastes and Preferences of the Consumers: When as a result of the rise in the income of the people, the demand increases, the whole of the demand curve shifts upward and vice versa.
In economics we would say that the demand curve For Coca Cola has shifted upward. When people would take more milk, the demand for sugar will also increase. Article shared by.
There are several factors which influence the quantity demanded of a lookbeyondthelook.comant among them are the price of the commodity, the price of related commodities, and income of the consumer, taste and preference of consumers, size of population and various other factors.
The demand changes as a result of changes in price, other factors determining it being held constant.
We shall explain below in detail how these other factors determine market demand for a commodity. These other factors determine the position or level of demand curve of a commodity. Research on WR markets in Chile has emphasized intersectoral allocations 5; however, WR demand and supply functions have not been estimated for the case of Chilean WR markets nor have the factors that influence WR demand and supply functions been studied or identified.
This research estimates consumptive WR supply and demand functions for. Normally, the demand for a product declines as its price goes up.
Conversely, demand increases as its price declines. However, other factors can cause the demand curve to shift to either the right.
Demand elasticity is the sensitivity of the demand for a good or service due to a change in another factor. There are many factors that influence a change in demand elasticity.
From the e-Activity, compare the primary individual factors that influence demand, and explain the significant ways in which each affects the demand curve.
Provide at least one (1) example of these factors to support your rationale.-The primary factors that influence demand are: the price of other goods, the income of the consumer, consumer taste and expectations%(7).A discussion on the factors that influence demand