Q:

What are some factors affecting demand economics?

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Quick Answer

The basic factors affecting demand economics are the quantity of a good or service consumers are willing to purchase and the price of the good or service. Other factors that influence demand economics include the price of complementary goods needed along with the good or service in question, the disposable income of the consumer, personal tastes and preferences, and expectations about future price fluctuations.

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Full Answer

The basic law of demand is that, if everything else stays constant, demand increases as the price of a good or service falls. Conversely, as prices rise, fewer people demand the good or service. Because of this relationship between quantity and price, demand curves are drawn sloping downward.

Other factors depend on particular circumstances. An example of complementary or related goods is automobiles and gasoline. If the price of gasoline rises too high, the sale of automobiles may decrease because there is less demand for them. This may prompt a higher demand for a substitute means of transportation such as bicycles. The urgency of need of a particular good or service is important. For instance, more umbrellas are likely to be sold during rainstorms. Additionally, if the population of potential consumers grows, the demand for goods and services also increases.

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