Explain the term change in demand. Also, explain three factors responsible for change in demand.
Explain the term change in demand. Also, explain three factors responsible for change in demand.
Change in demand or shift in demand curve is associated with change in demand due to factors other than the price of the commodity such as price of related goods, income etc. Factors responsible for change in demand are:
a) Change in income of the consumer- this is the most important factor for the change in demand. Generally, when the income of a consumer goes up, the demand for the commodity also goes up at the same price when income falls, demand for the commodity also falls at the same price.
b) Change in price of substitute goods- a fall in price of substitute goods increase its demand and reduces the demand for the given good while a rise in the price of substitute goods decreases its demand and increases for the given good.
c) Change in price of complementary goods- a fall in price of complementary good, increases not only its demand(say petrol) but also increase the demand or the given good (car)demand while a rise in the price of complementary good decreases the demand for both the goods.
Change in demand or shift in demand curve is associated with change in demand due to factors other than the price of the commodity such as price of related goods, income etc. Factors responsible for change in demand are:
a) Change in income of the consumer- this is the most important factor for the change in demand. Generally, when the income of a consumer goes up, the demand for the commodity also goes up at the same price when income falls, demand for the commodity also falls at the same price.
b) Change in price of substitute goods- a fall in price of substitute goods increase its demand and reduces the demand for the given good while a rise in the price of substitute goods decreases its demand and increases for the given good.
c) Change in price of complementary goods- a fall in price of complementary good, increases not only its demand(say petrol) but also increase the demand or the given good (car)demand while a rise in the price of complementary good decreases the demand for both the goods.
