1.2.1 Deamnd Flashcards
Factors leading to a change in demand
- changes in price of substitute and complementary goods
- changes in consumer incomes
- fashions , tastes , preferences
- advertising and brands
- demographics
- external shocks
- seasonality
What is demand
Is the mount society is willing and able to buy at a set price at a given point in time
A normal good is one where
If prices rise , demand will fall and vice Versa
The demand curve goes on what direction
\
What labels are on the demand curve graph
On the Y axis is price
On the X axis is quantity
It goes from p to …
and Q to
P1 to Q2
On the demand curve what will cause movement along the curve
Only price
Factors leading to a change in demand
- if a change in demand is caused by a change in price this is shown by a movement along the demand curve
- if the change in demand is caused by a change in any other factor this is caused by a shift in demand
What has a major impact on the quality demand of a product
Substitutes and complementary Products
Describe substitute products
Acts as an alternate ,therefore creating competition
Eg Pepsi and coke
If the price of good A increases the demand for good B increases
Positive correlation
Describe complementary products
Is a product brought alongside a good or service
Eg phone and charger
If the price of good A increases the demand for good B will decrease
Negative correlation
Changes in consumer incomes will change the demand for what types of products
Necessities
Luxuries
Inferior goods
Explain how the demand for necessity products are changed due to consumer incomes
It is less likely that demand for these will in relation to income
Explain how the demand for luxury products are changed due to consumer incomes
If income increases customers may be able to afford more luxury items , increasing demand
Equally if income falls these may be the first items cut
Explain how the demand for inferior products are changed due to consumer incomes
If income increases demand may decrease as customers switch to being able to afford better quality products
Eg Heinz instead of value
Explain how fashion , tastes And preferences are factors leading to a change in demand
People’s tastes changes over time and demand for fashionable products change regularly
As some products become more fashionable there is an increase in demand . Just as quickly demand can disappear as tastes and fashion changes.
Explain how demographics are factors leading to a change in demand
Demographics include age , gender , ethnic mix
Migration has seen an increase in demand for a wide range of goods and services e.g. Housing , public transport and healthcare
Also influences the type of products demanded e.g. Changing tastes of a more diverse nation and different demands for an ageing population
Explain how external shocks are factors leading to a change in demand
Unexpected events are those outside of the businesses control but have a direct impact on the level of demand
Eg financial crisis
Flash floods
Outbreak of disease
Explain how seasonality affects a change in demand
It exists because of changes in weather and public holidays
It affects demand for
- child care
- confectionary eg Ice cream
- holiday parks
- fashion
If the change in demand is caused by any factor other than price , what does it affect
The shift in the demand curve
An increase in demand is shown by a shift to the
Right
An decrease in demand is show by a shift to the
Left
