Discuss the factors, which affect demand: Explain the concept of price elasticity of demand and its significance to governments and producers.

Demand is the quantity of goods or run consumers will buy at a particular price, at a particular clock period. Market remove refers to the sum of several(prenominal) demand for a good or service. It is assumed that the demand being correspond is effective demand- the ability of consumers not just to want, that be able to buy the production. Quantity demanded is the inverse function of price, withal there are other factors which influence the take aim of demand.

Factors influencing individual demand differ from the factors influencing securities industry demand. The price of other goods and services affects the demand for a product. If a product has close substitutes, indeed the responsiveness of demand to change in price is high. The level of income of an individual also influences demand (especially effective demand). The higher ones income the count of wants to be satisfied. People on higher incomes spend more(prenominal) money on goods and services in absolute terms, but less in proportional terms due to their lower berth aver mount up propensity to consume. Personal preference and trends in fashion also dictate the level of individual demand.

The size of the population, age composition, distribution of people by sex, and socio-economic status influence the market demand. Big businesses study the composition of the population to best ensnare their most viable market place.



Both consumer expectations and the level of technical progress influence market demand.

These factors may affect demand either positively or negatively, resulting in an expansion or contraction of demand. The following model works on the effrontery that aside from price all other factors will be kept constant.

When the demand curve shifts to the right or left this results in consumers willing to buy more/less of the product at every possible price. A shift in the demand curve could be resulting...

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