In economics, the demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. It is a graphic representation of a demand schedule. An increase in demand then, means an increase in quantities demanded at each price, which is a total increase in the demand schedule, which is illustrated by a rightward shift in the demand curve. Similarly, a decrease in demand means a reduction in the quantities demanded at each price – a decrease in the demand schedule – and this is illustrated by a leftward shift in the demand curve.
Change in demand is a change in the quantities demanded at every price, caused by a change in the determinants of demands. Several factors other than a change in the price level may change in demand. The first factor that affects our willingness to purchase a product is our own particular preference. Tastes change over time and are influenced by many other things.
The second factor affecting the demand for a product is the income of consumers. The demand for normal product will increase as a result of our income increase, in contrast, the demand for inferiors products will decrease as a result of our income increase.
The third important factor is the prices of related products. A change in the price related products will affect consumer’s willingness and their ability to purchase a particular product. They may be related as substitutes, or complements. Substitute as products that can serve as replacement for one another. When the price of one increase, demand for the other will goes up. The demand will change if the price of complement goods changed as the complement goods that the products ‘go together’.
The fourth factor is the expectations of the future price, incomes and availability. Future expected prices and incomes can affect our present demand for a product, and does the prospect of a shortage.
Other than these four factors, the size of the market population will affect the demands for all products. A change in the distribution of incomes will lead to an increase in the demand for some products and a decrease in the demands for others. In addition, the age composition of the population also will affect the demand for difference products.
Other than these four factors, the size of the market population will affect the demands for all products. A change in the distribution of incomes will lead to an increase in the demand for some products and a decrease in the demands for others. In addition, the age composition of the population also will affect the demand for difference products.
For example, if the % of the total income earned by those over 65 years of age rises, while the % going to those under the age of 24 falls, then, we would expect to see an increase in the demand for holiday cruises ad a decrease in the demand for entry into popular night clubs.
No comments:
Post a Comment