Macroeconomics
personal preferences affects the demand for the products.
A favorable change in tastes and preferences related to a particular product indicates that consumers arepurchasingmore ofit.This increasesthedemand fortheproduct shiftingits curvetotheright .Forexample,asuddensurgeinhealthconsciousnessmightleadconsumers to shift their preferences towards healthier food options, resulting in increased demand for those products. Alternatively, an unfavorable change in tastes and preferences has the opposite effect causing a decrease in the demand for the product and, hence, a shift of its demand curve to the left . ● Incomes: Incomes allow consumerstopurchasegoodsandservices;therefore,anychangein them affects their ability to pay and, hence, the demand for products. Ingeneral,thereisapositiverelationshipbetweenincomeanddemand,especiallyinthecaseof a normal good . For this type of goods, demand increases as income increases, shifting the demand curve to the right, and decreases as incomedecreases,shiftingthedemandcurveto theleft.Mostproductsarenormalgoodsincludingthingslikecars,furniture,restaurantsmeals, and so on.
For other types of goods, there is a negative relationship between income and demand with lessbeingpurchasedasincomeincreases.These arereferredtoas inferiorgoods thatbecomeless desirable as consumers become better-off. For example, when people’s income increases, they might decide to reduce their demand for metro tickets and purchase their own cars instead. Metro tickets are inferior goods in this case.
● Market size and Number of Consumers: Many factors affect population size including migration,andwars,amongothers.Thestructureandsizeofapopulationcanleadtochangesin demand. Forexample,whenapopulationexpands,thedemandforhousingtypicallyincreases causingthedemandcurveforhousestoshifttotheright.Conversely,asapopulationages,the demand for services, suchasmedicalservices,tendstoriserelativetothedemandforgoods. This causes a shift in the demandforservicestotherightandashiftofthedemandcurvefor goods to the left.
● Expectations: Consumers’ demand for goods and services is also influenced by future expectations about their prices. For example, one might waitfor seasonal sales to buy a product because it is expected to become cheaper. In this case, expectations ofadecreaseinpriceresultinalower demand (i.e., shift to the left).
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