(d) The factors that effects demand other than the price of the commodity with diagrams
4.1 What drives demand?
In economics, there are five decisions of individual needs and a sixth of aggregate needs.
Removal year of demand
Five demands are determined as follows:
1. Prices of goods or services.
2. Buyer’s income.
3. Price of goods or services related. These are free, certain good or those that are purchased with the service, or replaced, instead of particularly good or the purchase of services.
4. Tasting or prioritizing the consumers.
5. Expectation. These are usually about the price will go on.
4.2 Demand Equation or Function
This equation expresses the relationship between demand and the five determinants.
QD = f (price, income, prices of related goods, tastes, expectations)
It says that the quantity required of a product is a function of five factors: the price, the buyer’s income, the price of the related goods, the consumer’s taste, and all the expectations that the consumer has of future deliveries, prices, etc.
4.3 How Each Determinant Affects Demand
Understanding how each decision factor affects a problem is the first assumption that all other decision makers are unchanged. All other things like ceteris Paris bus or “would call this principle. So, here is how each item affects the problem.
Price: The law of this issue stipulates that the amount of demand decreases when prices rise. This also means that the demand will increase as prices drop. If everything else is equal, people are based on their buying decisions at a price. The exact quantity purchased for each price level is described in the application list. It then displays the demand curve after it is drawn on the graph.
If the number of response requests is very heavy at the price, it is called resilient needs. No matter what price, if the volume does not change, there is an unelastic need.
Income: If the income rises, the number of requests. If income falls, so ask. However, doubling your income does not always mean buying a double of a particular property or service. Even if you are rich, you only have a pint of tape you want to eat. This is where the concept of marginal utility on the stage. The first cup of ice cream is delicious. You can have something else. Then, however, the border utility will begin to shrink to the point where it is no longer desirable. Figure 1.1 to see the effect of changes in income.
Q_2 Quantity (unit/time) Figure 1.1: Change in demand
Prices of related goods or services: The price of additional goods and services will be lower depending on the cost of use of the product you are requesting. For example, the gasoline price amounted to $4 liters in 2008, the demand for the hammer dropped. Gas is good and it complements the hammer. The cost to drive the hammer increased with the price of gasoline. The gas and hammer are complementary products the demand curve for hammer shifted to the right. Figure 1.2 to see the hammer product in the demand curve.
Figure 1.2: The demand for hammer product
Reverse reactions occur when an alternative price goes up. If such a thing occurs, people will want the best or more of services and proxies. So I constantly renewed on Apple’s iPhone and iPod. New Android phones and other replacements will soon appear at a lower price, and Apple will come up with a better product. So android is no longer an alternative. The demand curve for Apple product shifts to the left, the demand is decrease. Figure 1.3 to see the Apple product in the demand curve.
Figure 1.3: The demand for Apple product
Tastes: The basic set of public changes in favor of desire, emotion or product makes the required amount. Similarly, the requested amount will be expelled when the taste is against it. Brand Advertising is committed to increasing demand for consumer goods. For example, Buick spent millions of dollars to make you believe that your car is not just for seniors.
Expectations: When people expect the value of what they expect, they ask for more from it. 2005 Housing Asset Bubble description. The price of the house went up, but people were buying more because they hoped that the price would continue to rise. The price grew even more until the bubble burst into 2006. From 2007 to 2011, housing prices dropped by 30%. However, the requested amount does not increase. For what? People expected the price to drop. The record level of foreclosures went to market because of major mortgage crises.This question did not occur until people expected that the future price would be.
Number of buyers in the market: The number of users affects the global request or “added “. As more buyers enter the market, demand increases. This is true even if the price does not change. This was another reason for the real estate bubble. The low cost and first level mortgages have increased the number of people who can afford the house. The total number of buyers on the market is expanding. The request of this House has increased. When house prices began to fall, many realized that they could not afford to pay their mortgages. At that moment they never let him come. This reduced the number of buyers and led the demand.