Factors affecting demand
Investment
Consumption
Increases popularity of goods and services
Govt Spending
level of individual income
Demand requires an individual to have the ability to pay for g+s, therefore different levels of income will determine whether they will influence demand
Increase in capital
Reduction in production costs
Reduction in price
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personal preferences of consumers
Increase in Government Spending through subsidisation can decrease prices
A consumers personal preference will determine whether they want the g/s. This will affect quantity demanded
Increase in Demand
Increase in Supply of Goods and Services
Extension in Demand, lower equilibrium price
Weather - Changes preferences of goods and services e.g Coffee is more desirable in cold climates
Education and Work Force
Age composition
Higher skilled workers result in increased worker's efficiency, hence increased productivity of firms.
The age composition in a population determines the types of g+s demanded by a particular population
Quality - Increases desirability of goods and services
Increase in Government Spending , increases the amount of money going into businesses, through infrastructure, further increasing employment which increases disposable income, that could be used on goods and services increasing the demand. If demand increases, government spending will also increase due to the higher demand
Price- Subsides makes goods and services more affordable for consumers by decreasing the price by lowering the cost of produc Thus consumers demand for goods and services are increased, despite constant disposable income.
Example: $4 Billion Energy Efficient Home Packages: Governments helped households cut energy usage through the subsidisation of more energy efficient household appliances
Distribution of people
sex
The sex of an individual determines their ability to buy specific g+s and also limits their ability to consume g+s, thus influencing demand of varying g+s
Price
socio economic status
If the price of goods and services are high the product demanded is decreased
the SES of an individual will determine their ability to buy particular g+s and prioritise different g+s due to their ability to buy g+s
Increases accessibility of goods and services through lower prices. Which increases demand
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Decreases proportion of disposable income spent on electricity and theses appliances, therefore there is more money available to be spent on goods and services further increasing effective demand.
If the price of goods and services are low the product is at a higher demand
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Investment is an injection into the circular flow of income. Investment allows firms to raise capital for growth, as they have more money to spend.
Investment allows firms to develop better quality goods and services.
Investment allows consumer wealth to increase and increases individuals income, due to profits sharing (dividends) and a rising value of assets.