Demand

In economics effective 'demand' is the willingness and ability to pay for a product.

The main factors affecting demand for a product or service:

Price

What is the 'demand curve' above showing?

Prices of other goods 

Some products are substitutes and others are complementary goods.

Substitute products:

If the price of one of these products increased the demand for the other is likely to increase.

Complementary goods:

If the price of milk increased dramatically what would probably happen to the demand for cornflakes?

Changes in consumer incomes.

Goods such as cars and cinema tickets are called 'normal' products because demand will rise as peoples incomes rise.

The demand for 'inferior' products will fall as peoples incomes rise.

Can you see why demand for this product would probably fall as customers incomes were rising?

Fashion, tastes and preferences.

Over time these are very likely to change.

Advertising and branding.

]

Demographics.

This involves a study of the population.

Certain trends are evident about the UK population over recent years.

More elderly people.

Increased migration, from Eastern Europe for example.

An increased number of single people households.

Demand for which products may change because of these trends?

External shocks.

In a 'recession' demand for a range of products is likely to fall.

Seasonal variations.

Can you link the time of the year with either increasing or decreasing demand for a product?

The Demand curve explained: