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Demand and Supply (Demand : the amount of a good or service that consumers…

- - - - 1) Change in price
      - Non-price determinants
        
        Taste and preference 1) Affected by factors such as technological advancements and campaigning. :explode: The invention of smartphone and tablet have led to a change in preference from print publications to digital publications. :explode: Healthy living campaigns led to a change in taste and preference from non diet soft drinks to diet soft drinks.
        
        Expectations of future prices 1) If consumers expect the price of a good to increase, they will bring forward the purchase to avoid paying a higher price in the future. 2) If the good can be resold such as residential properties, consumers will also buy the good to sell it at a higher price later. 3) When these happen, the demand for the good will increase.
        
        Distribution of income 1)If income is redistributed from the rich to the poor, the demand for luxuries will fall and demand for inferior goods will also fall. 2) The rich becomes less rich and the poor becomes less poor. 3) The demand for necessities will increase as both the poor and rich will buy more necessities.
        
        Weather conditions : In winter, demand for coats and sweaters will increase and the demand for ice creams will decrease.
        
        Government policies 1)The government is the biggest spender in every country. 2) If the government increases expenditure, the demand for certain goods and services will increase. 3) The government can affect private expenditure by changing interest rates and tax rates. :star: If the government cuts income taxes, consumers will experience in a rise in their disposable incomes which will lead to increase in certain goods and services
        
        Level of income 1) When consumers' income rises, the demand for most good rises. These goods are known as normal goods. However, demand for goods such as inferior goods will decrease.
        
        Price of Substitutes and Complements 1) A rise in the prices of substitutes will induce consumers to buy less of the substitutes resulting in an increase in the demand for the good. 2) A fall in the prices of complements for a good will induce consumers to buy more of the complements, resulting in an increase in the demand for the good.
        
        Number of Substitutes and Complements 1) An increase in the number of substitutes will lead to a decrease in the demand for some goods. 2) An increase in the number of complements will lead to an increase in the demand for a good.
        
        Size of population : An increase in the size of the population will lead to an increase in the demand for certain goods and services.
        
        Structure of population 1) If the population is greying, there will be an increase in the demand for pharmaceutical products. 2) If the birth rate rises, the demand for infant products will rise
    - - 1) Leftwards shift = demand drop 2) Rightwards shift = increase in demand
- - - - Also known as changes in quantity supplied
        
        Caused by a change in the price of the good itself
    - - Also known as changes in supply
        
        Caused by change in non-price deteminants
        
        Cost of production
        
        Price of input 1) The cost of raw materials, fuel and power affects the profitability of goods. 2) Higher costs of input means that quantity supplied falls
        
        State of technology : Affects the efficiency of production. The better the state of technology, the more efficient the method of production, the lower the cost and greater quantity is supplied.
        
        Taxes and subsidies :explode:Under government policies as well :explode: 1) Taxes imposed can increase cost of production. 2) Subsidies can lower cost of production
        
        Efficiency of production 1) By using resources more efficiently, more output can be produced with the same amount of inputs.
        
        Production capacity 1) If the production capacity in the industry increases, which may occur due to an increase in the number of firms in the industry or an expansion of the production capacities of the existing firms,the supply of the good will increase.
        
        Expectations of price changes 1) If firms expect the price of a good to rise, they will hoard some of the output that they currently produce to sell at a higher price in the future. 2) This leads to a fall in the supply of the good
        
        Profitability of goods in joint supply 1) Goods in joint supply refers to goods that are produced in the same production process. :star: Petrol and Diesel. 2) In process of refining petrol from crude oil, diesel is produced. Therefore, if the demand for petrol increases, more petrol will be produce and the supply of diesel also increase.
        
        Profitability of substitutes in supply/Competitive supply 1) Substitutes in supply refers to goods that are produced using the same factor inputs. 2) If the demand for good X increases, which will lead to an increase in profit for good X, firms who are currently producing good Y may switch to production of good X, which will lead to a decrease in the supply of good Y.
        
        Disasters (Natural and man-made) 1) Natural disasters such as floods and earthquakes, and man-made disasters such as wars may kill workers and destroy factories and machinery. 2) This may lead to a decrease in the supply of certain goods including agricultural products
        
        Weather conditions 1) When weather conditions become less favourable, the supply of agricultural products will fall and harvest will decrease. 2) In the event of severe weather conditions, the supply of air travel will fall as the airlines will be forced to cancel flights
        
        Number or sellers
        
        When producers deem that certain products are lucrative and generate huge profits, more will enter the market, increasing the supply.