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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