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Unit 1 - Demand and Factors affecting demand :star: - Coggle Diagram
Unit 1 - Demand and Factors affecting demand
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Demand
= the quantity of a product bought at a given price over a given period of time
Prices of substitutes
If the price of substitutes fall, demand will rise
If the price of substitutes rise, demand will fall
If a product has a lot of close substitutes then the prices of these will affect demand significantly.
Prices of complements
If prices of complimentary goods rises, demand will fall
If prices of complimentary goods falls, demand will rise
For example, a reduction in the price of skiing accessories may encourage other to try skiing.
Changes in consumer incomes
when income falls, demand will also fall
For example, consumer who buys supermarket 'own label' brands may switch to a expensive brand when their income rises
generally when income rises, demand will also rise. They may decide to spend more money going out to restaurants
Change in consumer tastes and preferences
For example, many clothes items bought in one season would not be in demand in later seasons as they will be out of fashion.
if products is in fashion / taste they will be in demand
Marketing, advertising and branding
If goods are heavily advertised, demand for them is likely to increase
if a business has a stronger brand name, they can develop brand recognition and increase sales
Demographics
As population grows, there will be an increase in demand for nearly all goods and services.
External shocks
Favourable external shocks such as covid is beneficial to mask/ hand sanitizer businesses
Adverse external shocks will shift the demand curve to the left