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Demand (Demand Curve (Individual demand schedule/curve (Demand schedule of…

- - - - Horizontal summation of individual demand schedules or curves of all consumers in market
  - - - Income effect
        
        Due to an increase in the price of the good, the given money income can buy fewer units of the goods
        
        Purchasing power of money income of consumers has fallen
      - Substitution effect
        
        Occurs when there is a rise in price
        
        Consumers buy fewer units, switch to cheaper substitutes
  - - - Change in income
        
        Increase --> Increase demand for normal goods
        
        Increase --> Decreased demand for inferior products
        
        Extent of shift depends on sensitivity of the demand to change in income
        
        More responsive demand is to income changes, shift will be greater
      - Change in price of related goods
        
        Substitutes
        
        Alternative products that satisfy similar wants/needs
        
        Decrease in price of substitute --> Decrease in demand of normal product
        
        Range of substitutability narrow or broad
        
        Narrow: Different product brands
        
        Broad: Different product groups
        
        Complements
        
        Goods use jointly together to satisfy a particular want
        
        The closer two goods are as substitutes/complements, the greater the change in the demand for the good concerned
      - Change in taste and preferences
        
        Unfavourable change in consumer product --> Less desirable --> Fall in demand
        
        New products may affect consumer taste
      - Change in consumer expectations
        
        Regarding future prices/income
        
        Prompt them to buy more or less of a good in the current period
      - Government legislation
        
        Increase in demand for goods in requirement
      - Change in population size/demographics
        
        Increase --> Increase in no. of consumers --> Increase in demand
      - Changes in weather/season
        
        E.g. climate colder, demand for heating increases
      - Other factors
        
        Credit facilities
        
        Income distribution
        
        Exchange rate
        
        Interest rate
        
        Increase cause decrease in demand (higher costs of borrowing)