Determinants of Supply and Demand

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Presentation transcript:

Determinants of Supply and Demand

Determinants of Supply and Demand Factors that change the quantity demanded or supplied

Determinants of Demand 1.Consumer preferences 2. Market Size 3. Income 4. Price of related goods 5. Consumer Security

Consumer Preferences Tastes change What are some examples of tastes changing and therefore changing the amount of a product that is demanded?

Market Size The amount of people to buy the product may change What is a situation where this may occur?

Income As the average income goes up or down, sales for products will also change What is an example of this happening?

Prices of related Goods Substitutes- products easily replaced with others Complements- products purchased together What are some substitutes and complements?

Consumer Security If you feel good or anxious about future- it will affect how you spend money Give examples

Determinants of Supply Technological improvement Resource prices Taxes and subsidies Competition

Technological Improvement If productivity can increase

Resource Prices If prices of what goes into the product go up or down Steel shortage?

Taxes and Subsidies Subsidy- monetary grant to a business to help ease production or develop a new product Taxes- add to production costs

Competition More producers enter the market