Demand curves can change for many reasons. This can make it hard to understand how the market works. Here are some important factors that affect demand:
Changes in Income: When people's income goes up or down, their ability to buy things changes. If income goes down, people might buy less of cheaper items (called inferior goods). But if income goes up, they might buy more of higher-quality items (called normal goods).
Consumer Preferences: What people want can change quickly. A trend that was popular yesterday might not be what people want today. This can make it hard to guess what will sell well in the future.
Prices of Related Goods: The prices of similar products (substitutes) or items that go together (complements) can cause demand to change. For example, if coffee gets more expensive, more people might start buying tea instead.
Future Price Expectations: If people think prices will go up soon, they may choose to buy items right away. This can cause a sudden rise in demand.
These changes can make the market unstable and hard to predict, which can be tough for businesses and decision-makers. To handle this, companies can do regular market research and consumer surveys. This helps them get important information that allows them to adjust their strategies based on these changes in demand.
Demand curves can change for many reasons. This can make it hard to understand how the market works. Here are some important factors that affect demand:
Changes in Income: When people's income goes up or down, their ability to buy things changes. If income goes down, people might buy less of cheaper items (called inferior goods). But if income goes up, they might buy more of higher-quality items (called normal goods).
Consumer Preferences: What people want can change quickly. A trend that was popular yesterday might not be what people want today. This can make it hard to guess what will sell well in the future.
Prices of Related Goods: The prices of similar products (substitutes) or items that go together (complements) can cause demand to change. For example, if coffee gets more expensive, more people might start buying tea instead.
Future Price Expectations: If people think prices will go up soon, they may choose to buy items right away. This can cause a sudden rise in demand.
These changes can make the market unstable and hard to predict, which can be tough for businesses and decision-makers. To handle this, companies can do regular market research and consumer surveys. This helps them get important information that allows them to adjust their strategies based on these changes in demand.