Demand and supply Essay Example | Topics and Well Written Essays - 1500 words

Demand and add together - Essay ExampleThese factors have been pointed out and discussed by several authors (Stiglitz and Walsh (2002), Pindyck and Rubinfeld (2004), Mansfield (1992), Reynolds (1988), Colander, (2004) etc.). Stiglitz and Walsh (2002) demarcate these factors into economic and non-economic factors. Below is an civilization of these other factors.An increase or decrease in the income of consumers may running to a rise or fall in the get hold of for a product. This change by and large depends upon the nature of the commodity i.e., insufficient good or normal good. In chance of an inferior good, an increase in the income of consumer will lead to a fall in the demand of that particular(a) commodity and vice versa, because consumer will then charge up to a product much better than the previous commodity in his/her perception. On the contrary, in case of a normal good, an increase in the income of the consumer will cause the demand for that commodity to rise touch the demand curve to the adept and vice versa.This is another economic factor responsible for bringing slightly a shift in the demand curve. A change in demand of a particular product can be effectuated by a change in price of its close substitutes. The demand for a product will rise if the price of its substitute commodities increases, shifting the demand curve to the right and vice versa. For instance, the demand for coffee for some people will increase as the price of teatime rises and vice versa. On the other hand, more tea-consumers would shift to coffee if the price of coffee declines in the market, because a rational consumer will mostly opt for a cheaper substitute, once the price of any of the product rises.Complements be the products that are used or preferably used with another product. Any change in the price of complements will also lead to a change in the demand for the product. For instance if the price of milk increases, the demand for tea or coffee will also fall down, causing a leftward shift to the demand curve. It