Explain Factors That Affect Supply and Demand
Table of Contents
Table of Contents
Factors That Could Cause Changes In Supply and Demand
Substitute and Complementary Products
Necessity of Product and Price Elasticity
In business and economics, the relationship between potential buyers and sellers of goods is referred to as Demand and Supply. “Demand and Supply” was initially used by James Denham-Steuart, and has thence been unchanged. People who are connected through present trends are influenced through changes in goods supply, demand and price elasticity (Tortajada, 1999). Various factors contribute to price and quantity changes, market equilibrium, substitutions, and price elasticity. In order to understand the relationship between supply and demand, economics analyzes the shift of efficiency and supply and demand curves. Goods possession uniquely affects individuals’ needs and wants through supply and demand. A supply factor is one that affects a person’s decision to enlist products, while a demand factor is one that reflects overall access requirement (Tortajada, 1999). Factors That Could Cause Changes In Supply and Demand
Demand is the willingness, desire and capability of a consumer to buy a good or service. Demand of goods can be affected by various factors. These include the price of related goods, which could either be substitute goods or complementary goods. It is expected that if the price of a substitute good goes down, then, the demand for the good will also be low because consumers will tend to buy the low-costing substitute. Additionally, if the price of a complement good rises, then the demand for the good or service will fall. Demand can also be affected by consumers’ income. That is, if consumers experience an income rise, they will purchase more of a superior quality good and less of an inferior quality good (Heilbroner,...
References: Heilbroner, R., & Thurow, L. (1994). Economics Explained: Everything You Need to Know About How the Economy Works and Where It 's Going. New York: Simon & Schuster.
Kennedy, P. (2000). Macroeconomic Essentials. Cambridge: MIT Press.
Tortajada, R. (1999). The Economics of James Steuart: (Routledge Studies in the History of Economics). New York: Routledge.
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