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

DEMAND- What affects the level of demand?

Extracts from this document...

Introduction

´╗┐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.

Middle

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.

Conclusion

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.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our International Baccalaureate 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 International Baccalaureate Economics essays

  1. Econ IA-Supply and Demand

    "There is no suggestion the site is illegal. We examined this issue during the petrol inquiry and we examined it closely during the proposed merger between Caltex and Mobil," he said. "Nevertheless we are concerned by coordinated conduct. It (the website) does risk the possibility of less competitive outcomes for consumers and that's why we've raised it as an issue of concern."

  2. Aggregate Demand

    If governments are obliged to correct market failures, then it will also rise. A new educational of health policy might require increased public spending on schools or hospitals. Net Exports (X - M): - Exports (X): Domestic goods and services that are bought by foreigners; when firms sell exports to

  1. Economics HL Demand of Housing

    Typical mortgage payments for a new borrower had fallen, from a peak of 48% of average disposable earnings in September 2007 to 29% in August 2009. However, the latest figures from the Bank of England showed that the cost of a five-year fixed-rate mortgage continued to climb during August, despite wholesale funding costs dropping.

  2. Economics Higher Level Coursework

    Also, technological advancements increase the productivity of rubber suppliers, further increasing supply, yet also increasing the number of rubber substitutes such as synthetic plastics, which decrease the demand for rubber. Although more countries open for rubber trade, increasing income and population implies larger consumer demand for rubber, since rubber is

  1. Economics Higher Level Coursework

    Since the product lines of the acquired companies are different, the market demands of these products manufactured are also diversified; even if one product faces a dropped demand the others may not be affected. Less risk bearing means less need to hold stocks, which lowers the cost of stockholding.

  2. Economics Higher Level Coursework

    Firstly, if we see China as in the "take off" stage of Rostow's model of economic growth, more of the society's resources will be given to capital goods instead of consumer goods due to opportunity cost. If less essential goods are produced for China domestically, or that most of these

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