Factors Affecting Demand And Demand

860 Words4 Pages
In an economy, where the market forces of supply and demand move freely, the price of a commodity communicates its scarcity. The model of supply and demand shows how producers and consumers interact to determine the quantity of a commodity sold and the price at which it is sold at the market. In order for this model to function efficiently, it is imperative to determine the behavior of both producers and consumers, as well as how their behaviors influence quantity and price. Several factors affect the demand and supply of a good. Factors that affect demand include the price of the good, price of substitutes and complimentary goods, tastes and preferences of consumers, consumer income, and government actions. All these apply in the case of Katrina’s candies. On the other hand, factors that affect the supply of a good include the cost of producing the good and government rules and regulations.…show more content…
This is usually because of changes in income of consumers, price of related goods and tastes and preferences. On the other hand, change in quantity demanded, or movement along the demand curve means that the consumer moves from one point on the demand curve to another due changes in the price of the good, all other determinants of demand held constant. In other words, the consumer is likely to consume more candy when the price is lower than when the price is high. This usually occurs because of changes in the demand price of the good, which is the maximum price the consumer is willing to pay for a given

More about Factors Affecting Demand And Demand

Open Document