demand

• normal goods- demands increases
• inferior goods- demand decreases
• Are 4 factors affecting demand?

  • advertising
  • trends
  • population
  • seasons
• Yed calculation= change in QD% divided by change in% in income
• income elastic an inelastic goods = normal goods
• Inferior goods= YED
• Income inelastic goods= necessities
• Income elastic goods= luxuries
• Cross elasticity of demand is important because:

  Calculates how competing firms' prices will affect demand for there products
• Calculation for XED


  change in good A% divided by change in good B%
• XED positive= substitutes
• XED negative= complements
• PED calculation?


  Change in QD% divided Change in price%
• PED between- infinity and 0
• Inelastic demand- 0 & -1
• Elastic Demand=-1 and -infinity
• perfectly inelastic demand= 0
• perfectly elastic demand= -infinity
• PED = elastic at high prices
• PED = inelastic low prices
• 4 factors affecting PED:

  • Time
  • brand loyalty
  • % of income
  • substitutes
• 3 uses of YED?

  • Effect on recession
  • help firms anticipate future demand
  • business planning
• 2 uses of XED?

  • Marketing strategies
  • information for competitors
• joint demand= complements
• As price rises QD decreases
• unitary demand = -1
• What factors influence PED?

  1. N- necessities
  2. A-addiction & habit
  3. S-substitute
  4. B- Brand loyalty
  5. I-income
  6. T-Time
• effective demand= demand supported by intention and ability to buy
• Latent demand: willingness to buy but not yet ability to buy
• Derived demand: The demand for a good or service that is a consequence of the demand for another good or service.
• 4 shifts in demand?

  • Income change
  • taste
  • law
  • expectation
• Demand=


  To be willing and able to purchase a good or service