Demand in a market

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Individual demand curve and market demand

  • A change in price DOES NOT SHIFT the curve, but causes a movement along it.

Factors shifting the demand curve (the conditions of demand) - 

  • Changes in income - rises in income means more demand (only for normal goods).
  • Advertising and publicity - successful and promotional activity will usually mean rising demand as consumers become more aware of the benefits of a product, or gain confidence in it.
  • Prices of substitutes - e.g. if Lindt prices drop then demand for Mars bars will decrease.
  • Prices of complementary products - when prices of these go up, demand for the related product tends to fall as well. 
  • Fashion - in 'season' clothes will have increased demand
  • Changes in quality - improvements will increase demand (assuming price remains constant)
  • Weather conditions - seasonal foods may be more in demand in a particular season
  • The law - regulation such as bans or complusory laws affect demand
  • Uncertainty over future prices - if consumers expect future prices to rise they may demand more NOW. Likewise, if prices are expected to fall, they may hold back until it does. 
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