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NONPRICE DETERMINANTS or FACTORS THAT AFFECT DEMAND The information that follows will allow you to identify and analyze the effect of certain non-price determinants or factors on the demand for a product. Each numbered item is a non-price determinant of demand (something other than the price of the good itself). 1. the number of buyers in the marketplace ______ # ______D ______ # ______D Relationship: _______________________ 2. the taste and preferences of consumers ______ T/P ______D ______ T/P ______D Relationship: _______________________ 3. the income of consumers ______ I ______D Relationship: _______________________ ______ I ______D exception: inferior goods (bread, potatoes, beans, and cabbage in lieu of meat; margarine in lieu of butter) ______ I ______D (inferior) Relationship: _______________________ ______ I ______D (inferior) 4. expectations about the future expectations about FUTURE prices ______ E(p) ______ E(p) ______D (current) ______D (current) Relationship: _______________________ expectations about FUTURE income ______ E(I) ______D (current) Relationship: _______________________ ______ E(I) ______D (current) 5. prices of related goods A. substitutes (goods use in place of each other) hamburger tea cornflakes bus ___________________________________________ ___________________________________________ ___________________________________________ ___________________________________________ Coke (good) Pepsi (substitute) ______ P (s) ______D (good) Relationship: _______________________ ______ P (s) ______D (good) B. complements (goods consumed or purchased together; if you buy one, you will more than likely buy the other) peanut butter hamburger patties razor paper cup dispenser ___________________________________________ ___________________________________________ ___________________________________________ ___________________________________________ ______ P(c) ______D (good) ______ P(c) ______D (good) C. independent goods Relationship: _______________________ Relationship: _______________________ Summary: A change in any of the five non-price determinants of demand will result in a change in demand. This means that the quantity demanded at EACH AND EVERY PRICE will change. A change in demand is illustrated graphically by a shift in the demand curve to the left or to the right. Illustrate shifts in the demand curves: P P Q D Q D A change in price will result in a change in __________________________; this relationship can graphically illustrated by ____________________________ the demand curve. A change in non-price determinants of demand will result in ______________; the resulting relationship can be graphically illustrated by a ____________ in the demand curve.