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Word Count: 1,278
Demand the quantity of a good or service that consumers are willing and able to purchase at various price levels at a given point in time Individual demand demand of individual consumers Market demand demand by all consumers for a g or s Market demand obtained by summing quantities demanded by all individual consumers at various price levels Factors effecting market demand the price of the good or service itself the consumer must decide whether or not willing to pay nominated price Necessaties are goods purchased regardless of price but reduce demand for luxury items if price rises the price of other goods and services consumers consider some goods as close substitutes eg margarine and butter If price of margarine increases demand for its substitute butter increases Also some goods considered compliments eg car and petrol If decline in demand for cars 8595 in demand for petrol Expected future prices if price expected to increase in future they would bring forward consumption and increase the current demand for the product Changes in consumer tastes and preferences eg clothing Clothing coming into fashion 8593 demand clothing going out of fashion 8595 demand The level of income as income level 8593 ability and wiliness to purchase 8593 Increase in income usually results in more increase in demand for luxury goods than necessities Change in income distribution would also change level of d eg distributing income to higher earners lead to increase in demand for luxury items Consumer expectations about future income levels and prospects influence decision to buy certain types of goods Eg less likely to purchase luxury items if economic outlook is bleek The size of the population and its age distribution size effects total quanitity of goods demanded age determines type of goods demanded Eg australias ageing population more likely to demand aged care the ceteris paribus assumption when studying the nature of market demand we look
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