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Econs Chap 2A - Coggle Diagram

- - - - Price an individual is willing to pay for a unit of a good is determined by the satisfaction he derives from consuming that unit of the good
  - - - Non-price Determinants
        
        Change in consumers' income
        
        More income buy more, increase demand
        
        Change in price of related goods
        
        Substitutes in consumption
        
        Goods that can be used in place of one another for the satisfaction of a particular purpose
        
        Complements in consumptrion
        
        Goods used in conjunction with one another in the satisfaction of a particular purpose
        
        Changes in consumers' expectation
        
        E.g. If consumers think price of car will increase in future, they more likely to buy cars now
        
        Change in consumers' taste and preferences
        
        E.g. A lot of travel ads make people want to travel more, increasing demand
        
        Changes in the number or composition of consumers
        
        Population grow, higher demand
        
        Govt policies
        
        E.g. Healthy eating campaign increase demand for healthy food
- - - - Non-Price Determinants
        
        Changes in the costs of relevant resources
        
        E.g. Increase in price of electricity, producers supply less due to higher production cost
        
        Fall in the quantity supplied of the good at every price point
        
        Changes in price of related goods
        
        Substitutes in production
        
        E.g. Corn and Soya beans are substitutes since they require same resources to produce. If corn price rises, producers put up more corn for sale and less soya beans for sale
        
        Complements in production
        
        Produced when the same resources are used.
        
        E.g. Beef and Leather
        
        Nature, 'random shocks' and other unpredictable events
        
        E.g. Wars, diseases, earthquakes, floods, industrial disputes. These lower supply
        
        Expectation of future price changes
        
        E.g. When price expected to rise, prodscers build up their stocks to release more on the market when the price does rise. They also install more machine or take on more labour so they can sell more when the price rises.
        
        Changes in Technology
        
        When a more efficient technology is discovered, production costs will fall, suppliers will be more willing and more able to supply the good at each price. Then supply increases.
        
        Number of sellers
        
        The more sellers the more supply
        
        Government policy - Indirect taxes and subsidies
        
        Tax removed shift supply curve up, Subsidy paid shift supply curve right