1.2.1 Demand Flashcards
Define demand
The amount of a good consumers are willing and able to buy at a given price
What types of factors can lead to change in demand?
- Price
- Non price
How can price affect demand?
As price increases, demand will normally decrease as less customers are willing to pay the price
What non-price factors affect demand?
- Consumer income
- Substitutes
- Complimentary products
- Consumer tastes/fashion
- Advertising and branding
- Demographics
- Seasonal changes
- External shocks
How can price of substitutes affect demand?
Customers may buy a cheaper alternative
How can prices of complimentary products affect demand?
As prices of complimentary goods rises, demand for the main product falls.
How can changes in consumer income affect demand?
As consumer income increases, demand for some products falls (people might buy fresh food instead of microwave meals).
How do fashion trends affect demand?
As trends rise, so does demand. Fads are short lived.
How do advertising and branding affect demand?
Calls the publics attention to a product. Heavy branding keeps demand stable.
How do demographics affect demand?
UK population is getting older, meaning different products will be higher in demand.
How do seasonal changes affect demand?
Some products reach peak demand at certain times of the year. Eg: Christmas cards
How can external shocks affect demand?
Terrorism, war, disease, and health scares can change demand.
