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Factors Affecting Demand and Quantity Demanded

Explore why demand can increase or decrease even if the price remains the same. Learn about determinants of demand, including consumer income, price of related goods, complements, types of consumers, consumer expectations, and preferences.

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Factors Affecting Demand and Quantity Demanded

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  1. Why might demand go up or down even if the price of the product remains the same? Imagine that the Subway across the street sells 40 $5 foot longs on an average day. Why might quantity demanded go up to 60 even if the price stays at $5? S&D Determinants of Demand

  2. Graphing Demand

  3. With 2 dashed lines, draw the following on the same graph!

  4. Determinants of Demand:factors (other than price) that affect demand • Consumer Income: • Normal goods: real income increase, demand of these increases • TVs, steaks, cell phones • Inferior goods: real income decreases, demand of these increases • Laundry mat, used products, bologna

  5. 2. Price of Related Goods • Substitutes: • Price of sub increases, demand of original increases • Price of sub decreases, demand of original decreases • Price of El Pollo Loco doubles!Will demand for Subway increase or decrease?

  6. B. Complements: products that you buy together • EX: milk & cookies • Airplane tickets & hotels • Price of complement increases, demand for original decreases • Price of complement decreases, demand for original increases • If there’s a huge salsa sale, what will happen to the demand for chips?

  7. 3. Types of consumers • Increase in elderly – demand for “elderly” products will increase • Ex: • Increase in teenagers – demand for “teen” products will increase • Ex: • Right now, which group is larger? Who should you make products for?

  8. 4. Consumer Expectations • How do most ppl feelabout the economy right now? • If consumers expect econ to be bad – demand decreases • If consumers expect econ to improve – demand increases

  9. 5. Consumer preferences • The last answer! • How ppl feel about the product – is it “cool”?

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