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DEMAND- What affects the level of demand?

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DEMAND Demand is the quantity of goods and services that the consumers are willing and able to purchase at a given price at a given period of time. The law of demand states that when there is a change in price of the product, there is a change in quantity demanded of that product ceteris paribus. Ceteris paribus is an assumption that when there are a lot of factors that affect a certain thing, only one changes and that the rest remains unchanged. ...read more.


This is called income effect. Likewise, if there is a fall in price for a product, the consumers will be more attracted to this product than those products whose price remained unchanged. Thus, the consumers will buy more of this product substituting for the products bought earlier. Both these will cause a movement along the demand curve in the graph of demand. There are two types of products which affects on how a change in income affects the demand for a product, i.e. ...read more.


The price of products will also affect the demand of a product. Of the goods are substitutes, then an increase in price of one product causes the quantity demanded for that product to decrease and the demand for its substitute to increase. This causes a movement along the demand curve for the product and a shift of graph to the right for its substitute. If the good are complements, then if the price of product A increase, the quantity demanded for prduct A and the demand for product B, its complement, This will cause a movement along the demand curve for product A and a shift of the demand curve to the left for product B. ...read more.

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