Causes of demand curve shifts
There are a number of causes of demand curve shifts. These causes lead to changes in demand curve factors, such as average income and priority demand, which are responsible for changes in the demand curve right or left, or for increases or decreases in the quantity of demand or the price of demand. There are a number of other factors that determine demand Price and quantity of demand There are a number of factors that cause demand and quantity to stabilize.
Demand is determined by the size of the product the consumer wants to buy, but they can also buy it at different prices. The desire to buy within an economic market is determined by preference, while the ability to buy indicates the importance of income. The prices of different goods also influence the determination of the amount of demand. A factor that affects the demand curve is population density.
Key factors in the stability of the demand curve
There is a variable relationship between the demand curve and the supply curve, with the quantity of demand being determined by the price. Therefore, it is important to consider the economic factors underlying the determination of supply and demand curves through the determination of product price. Economists believe that the laws of supply and demand are not always true. Some of the major factors that influence the stability of the demand curve to include.
Income
When the average price of a good is not expensive, or when people are able to buy that good, then that good may appeal to many people and become a good that is in high demand, and that income may affect the demand curve, but it does not have to. Changes in the quantity demanded are the result of individual demand, it must be collective But the only difference here is that not everyone's highest or lowest income is the same, but it is certain that income affects the demand curve of the whole market.
Conventional Goods.
When income increases, the demand for goods also increases and vice versa, but there are some exceptions where the quantity demanded increases as income increases, it is possible that many people buy many ordinary goods that are considered low income, in this case, the goodwill rise in price, although the higher income the lower the demand, this is called a poor quality good, in this case, the demand curve will shift to the left.
Other factors affecting the demand curve
In addition to income, there are other factors affecting the demand curve that is critical to changes in the number of goods demanded, such as preferences, population density, prices of various goods, expectations for lower and higher-priced goods, and the size of people's demand, that is, the number of certain goods purchased at a given purchase price. The demand curve, unlike the main curve, has a new demand curve on the right and a low demand curve on the left.
Related Goods.
The price of a good affects the demand curve for the main good and other goods, which are called complements or substitutes. Supplements and substitutes are goods or services that we can use instead of the main good, such as printed books or e-books, which are substitutes for the original book and are characterized by the low price, there are other examples, in recent years the demand for tablet computers increased and according to the demand curve, the demand for this good became high and as a result, the demand curve for other computers became lower, which led to an increase in the price of the substitute good.
Thus, there are many complementary goods in a market where one good contributes to the consumption of another good, for example, if the price of golf clubs goes up, the demand pattern for that good goes down, and with it, the demand for additional goods, such as golf balls, goes down. Demand curves refer to the demand for alternative or complementary goods, such as trips to ski resorts.
Changes in expectations or other factors affecting demand
Certainly, a good or commodity affects the amount of demand for it, just as expectations about the future price of the good affect the demand curve, as do expectations about preferences and income. Stocking more coffee will change the demand curve and lead to changes in other economic factors.
How production costs affect supply
The demand curve shows the changes that occur in supply and the changes in price up or down, so the demand curve changes in accordance with the change in the supply of the good with each change in price, this change means that supply also changes with each price, so we must consider all the factors that affect supply. Such as profit, income, costs, production of goods, use of labor, cost of materials and equipment, these factors are known in the economic market as production resources and factors of production, which means that when the cost of production in a company falls and the price of goods or services provided remains the same and does not change, this means that the profit of this company increases.
And when that company reaches profit, the production volume increases, the higher the production volume, the higher the profit, but when the cost of production decreases, the company will offer and set the price of goods based on the production price that will appear within the supply and demand curves. An example of this would be a company placing its goods or services on gasoline. If the price of gasoline, which is one of the most important costs for the company, were to increase, this company would replace this option with a remote link to reduce the production costs of the company. long distances and greater availability to use an alternative, cheaper gasoline products.
Conversely, if the company has higher production costs, this means lower profits even if the price of its own product changes or decreases, because high production costs lead the company to distribute less product at any product price, which is also reflected in the supply and demand curves in the left-hand bar.
Other factors affecting supply
Factors affecting the demand curve include the prices of inputs into the production process, which in turn affect supply, and among the many factors that can affect the supply curve are
- Weather conditions.
- Natural conditions.
- The use of new technologies in production.
- Government policies.
For example, in 2014, agricultural production was affected by natural changes in the northeastern region of China, due to the drought that occurred due to severe weather, which affected the production of wheat, corn, and soybeans in the country, as the drought reduced supply, and the small amount that remained was available at any price, which means that natural or atmospheric changes can change both the demand curve and the supply curve.
Comments
Post a Comment