Tuesday, November 11, 2014

What is an example of change in demand?

What is an example of change in demand?
Well to answer the question lets go back a few steps:

In Economics:

Law of Demand ( according to investopedia) - A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.

Here's a graph of what a typical demand curve looks like: click the NeTMBA link that follows this answer



So now that we know what the Law of Demand is now lets see what effects it. The Law of Demand is affected by:
Customer Preference Income Number of Potential buyers Expectations of Price Change
Price of Related goods- Complements and Substitutes
Complements- a good often consumed together with another good in economics. So if the Price of complements goes up then the demand for the good goes down thus shifting the graph to the left.

Substitutes- A good where in can be used in place of another.

There are other factors that effect it but the list above are some of the most common ones. I hope this helps with understanding the law of demand. To find an example of this click on the NeTMBA link that follows to see it.

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