• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

he main factors that affect the consumers expenditure are level of income, price of the good or service, the price of substitute and complement goods, consumer tastes and preferences and advertising. and services

Extracts from this document...

Introduction

There are several factors that affect the individual's demand for goods and services. The main factors that affect the consumer's expenditure are level of income, price of the good or service, the price of substitute and complement goods, consumer tastes and preferences and advertising. An individual's level of income is one of the main factors that affects the individual's demand for goods and services. As an individual earns a higher income, they tend to buy more items and, items of a higher quality as they have more money to spend. If the price of a can of Coke goes up from $0.50 to $1 and income stays the same, the income that is available to spend on coke, which is $2, is now enough for only two rather than four cans of Coke. ...read more.

Middle

For example, if the price of a cup of coffee rose, consumers could replace their morning caffeine with a cup of tea. This means that tea is a substitute good because a raise in the price of coffee will cause a large decrease in demand as consumers start buying more tea instead of coffee. However, some goods are considered to be complement goods, meaning that they are goods that consumers purchase with other goods. For example, a car needs to be bought with fuel. If the price of cars increase, the consumer demand for cars, as well as petrol, would decline. ...read more.

Conclusion

Advertisers conduct extensive research into the wants, interest and fears of consumers, and use this as a basis for marketing and advertising. Government policies that might be used to encourage individuals to increase their savings are tax policies and a rise in interest rates. The tax system can influence an individual's decision to save by making lower taxes on superannuation savings and increasing the tax rate on goods and services. This will discourage consumers to spend, and encourage them to save. By rising the interest rates, consumers will be more likely to save than spend, because they will accumulate interest on their savings which is positive, and accumulate interest on their spending, which is a negative. ?? ?? ?? ?? Katherine Ly- Economics ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. Factors that influence the price of houses

    This is a direct relationship. Price S P1 D Q1 Quantity A change in price never shifts the supply curve for that good. In the diagram below, there is an increase in price, which results in a movement up the supply curve.

  2. Critically evaluate the perceived competitive starategies of the five clothing retail outlets, namely Edgars, ...

    With consumer confidence in positive territory in January 2001 and positive sales in the second quarter of 2001, for the first time in 18 months, the predictions for sales in 2001 are optimistic. Nevertheless, the financial turmoil of the post 1995 period, accompanied by continued high interest rates, high consumer

  1. Political decisions can affect Nestle for the good and the bad, because if taxes ...

    Consumers eating less chocolate because of health risks or a seasonal variation in the summer months where Ice Cream is more popular (Ice cream version of the KitKat egg). Consumers spending their disposable income on new technology like mobile phones, computer games and young children spending money on new toy ect.

  2. Labour is a derived demand because the demand for labour is a result of ...

    These are payments to employees exceeding the award wage, which is the standard rate of pay. Non-wage outcomes can take many forms, some of which are provisions of a company house or car, a laptop, and payment of private education fees for children.

  1. Scarcity and Unlimited Wants.

    The private sector is made up of members of the general public and firms owned by the general public. These firms include sole traders, partnerships, limited companies (owned by private shareholders) and Public Limited Companies (Plcs) (also owned by private shareholders).

  2. Economics Coursework: The Price Mechanism - House prices.

    There are four main types of mortgage rate: Variable Mortgages: Most mortgages are taken out at variable rates of interest. This means your lender sets an interest rate and from time to time this will be moved up and down in relation to general movements in interest rates in the wider economy.

  1. Factors that influence the Price of Houses.

    This is a direct relationship. Price S P1 D Q1 Quantity A change in price never shifts the supply curve for that good. In the diagram below, there is an increase in price, which results in a movement up the supply curve.

  2. The AIDS Epidemic: The Price of Death.

    There are two major classes of drugs that prevent the disease from multiplying, reverse transcriptase inhibitors (RT) and protease inhibitors. Reverse transcriptase inhibitors interfere with an enzyme essential to the production of a new virus, significantly slowing the onslaught of the disease.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work