1.2.2 - Demand

• Factors affecting demand include price, weather + seasons, government legislation, advertising bans for cigarettes, age restrictions for fireworks, and incentives such as subsidies.
• Subsidies can reduce prices for consumers, which can increase affordability.
• Advertising can make customers more aware of the benefits of a product.
• Taste or fashion can influence demand, for example, if something becomes more fashionable, we expect the demand for it to increase.
• Demographics, such as changes in the population or an ageing population, can affect demand.
• Substitutes, such as higher prices for one product encouraging customers to buy more of another product, can influence demand.
• Complements, goods which are in joint demand such as printers and ink, shampoo and conditioner, can lead to a rise in demand for both products.
• A rise in demand for one product can lead to a rise in demand for the other.
• Demand curves can be used to understand the relationship between price and quantity demanded.
• Diminishing marginal utility refers to the decrease in satisfaction from an additional unit of a good or service.
• Increasing demand is a situation where the quantity demanded rises as the price rises.
• Methods to raise demand include offering a free trial or discounted price, which allows consumers to experience the benefits of the product without paying.
• High inflation in 2023 can reduce real incomes and consumption spending, making it more difficult to raise demand.
• There may be legal restrictions in selling or advertising your product in certain locations, which can raise costs.