3.4 behind the demand curve

• factors that affect demand:

  • substitutes
  • complements
  • consumer incomes
  • tastes and expectations
• Substitutes: Goods that can replace each other.
• substitutes:A price rise in one good increases demand for its substitute
• Complements: Goods that are used together.
• complements: A price rise in one good decreases demand for its complement
• Normal Goods: Goods for which demand increases as income rises (e.g., luxury goods).
• Inferior Goods: Goods for which demand decreases as income rises
• Consumer Preferences: These are influenced by trends, advertising, and social factors
• • Econometrics is used to estimate market demand using statistical data. It’s important to note that the results are estimates and may not be fully reliable due to variations in real-world conditions.