These are the elements, excluding the product's own price, that affect how much of a product people want to buy. Think of these as the puppeteers behind the scenes, pulling the strings that move the demand curve left or right.
Now, when the demand increases, the curve shifts to the right. Imagine it like the demand curve doing a 'moonwalk' to the right on the graph! More quantity of goods is wanted at every price. On the contrary, when demand decreases, the demand curve shifts to the left, kind of like it's 'side-stepping' to the left, indicating less demand at each price.
Income: As income goes up, you're feeling richer and start buying more, causing demand to rise for normal goods. Kind of like when you get your first paycheck and splurge on things you've always wanted.
However, if we're talking about 'inferior goods' (not necessarily 'bad', just less preferred or lower quality), an increase in income leads to decreased demand. Why? Because now you can afford to buy something better. Imagine trading up your instant ramen diet to dine in a fancy restaurant!
Price of Related Goods: This can be tricky. Goods can be 'substitutes' or 'complements' to each other. If Pepsi and Coke are having a price war and Pepsi's price goes up, you'd likely buy more Coke as a cheaper substitute. It's like choosing between two rival football teams' merchandise!
If we talk about complement goods like coffee and sugar, imagine if the price of coffee goes up, you might cut back on your coffee consumption, and therefore you'd also need less sugar.)
Tastes and Preferences: The 'cool' factor. What's in trend affects demand too. If quinoa becomes the latest health fad, more people will want to buy it. Imagine if BTS suddenly started promoting a certain brand of sneakers. The demand would skyrocket, right?
Expectations of Future Price Changes: If you know the price of a new phone is going to drop next month, would you buy it now or wait? Most would wait, right? This means demand decreases now but would increase later when the price drops.
Number of Consumers: This one is pretty straightforward. More consumers = more demand. If a city's population suddenly increases, the demand for local goods and services would likely go up too.
So that's it! Now you know that the demand isn't just about prices but also involves income, related goods, tastes, price expectations, and the number of consumers. Remember, it's not just about money but also about what you want, what you expect, and how many of you there are!
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These are the elements, excluding the product's own price, that affect how much of a product people want to buy. Think of these as the puppeteers behind the scenes, pulling the strings that move the demand curve left or right.
Now, when the demand increases, the curve shifts to the right. Imagine it like the demand curve doing a 'moonwalk' to the right on the graph! More quantity of goods is wanted at every price. On the contrary, when demand decreases, the demand curve shifts to the left, kind of like it's 'side-stepping' to the left, indicating less demand at each price.
Income: As income goes up, you're feeling richer and start buying more, causing demand to rise for normal goods. Kind of like when you get your first paycheck and splurge on things you've always wanted.
However, if we're talking about 'inferior goods' (not necessarily 'bad', just less preferred or lower quality), an increase in income leads to decreased demand. Why? Because now you can afford to buy something better. Imagine trading up your instant ramen diet to dine in a fancy restaurant!
Price of Related Goods: This can be tricky. Goods can be 'substitutes' or 'complements' to each other. If Pepsi and Coke are having a price war and Pepsi's price goes up, you'd likely buy more Coke as a cheaper substitute. It's like choosing between two rival football teams' merchandise!
If we talk about complement goods like coffee and sugar, imagine if the price of coffee goes up, you might cut back on your coffee consumption, and therefore you'd also need less sugar.)
Tastes and Preferences: The 'cool' factor. What's in trend affects demand too. If quinoa becomes the latest health fad, more people will want to buy it. Imagine if BTS suddenly started promoting a certain brand of sneakers. The demand would skyrocket, right?
Expectations of Future Price Changes: If you know the price of a new phone is going to drop next month, would you buy it now or wait? Most would wait, right? This means demand decreases now but would increase later when the price drops.
Number of Consumers: This one is pretty straightforward. More consumers = more demand. If a city's population suddenly increases, the demand for local goods and services would likely go up too.
So that's it! Now you know that the demand isn't just about prices but also involves income, related goods, tastes, price expectations, and the number of consumers. Remember, it's not just about money but also about what you want, what you expect, and how many of you there are!
Dive deeper and gain exclusive access to premium files of Economics HL. Subscribe now and get closer to that 45 🌟