Non Price Factors of Demand

Question 1

explain how income dictates a NORMAL GOOD (levels of disposable income)

Answer 1

normal good = demand increases as income increases (like gucci)

Question 2

explain how income dictates a INFERIOR GOOD (levels of disposable income)

Answer 2

demand decreases as income increase (like homebrand)

Question 3

what is a substitute and example (price of related goods)

Answer 3

consumers can choose between a number of goods and services that satisfy the same wants
(burgers for pizza)

Question 4

what are the 5 non price factors (PELTD)

Answer 4

levels of disposable income, price of related good, taste+preferences, expectations of consumers, demographic factors

Question 5

what is a complement and example (price of related goods)

Answer 5

goods consumed with other goods

if burger price decreases, demand rises and demand for chips as complement rises

Question 6

what are tastes and preferences

Answer 6

the things consumers prefer to buy for example organic things.
very swayed by advertising

Question 7

explain expectations of consumers

Answer 7

if people expect conditions to change in the future they make economic decisions now rather than wait this is called rational behaviour

Question 8

using an example explain expectations of consumers with relation to decrease and increase

Answer 8

petrol price predicted to increase, consumers have more incentive to buy more now
petrol price predicted to decrease, consumers will wait

Question 9

what are demographic factors and how do they affect demand

Answer 9

size and age composition of population

depending on this only specific g+s will be affected