To begin with, demand is the customers requirements and desires, which might be changed because of external factors. When saying “demand,” economists mean the desires of customers to buy some products or services during some period of time, and these wishes can change due to different aspects and situations on the market and in the world. That is why demand is not a stable variable; it can change, and economists analyze why it happens. Various factors influence the demand and can influence it, for instance, income, population, necessity of the offered goods and services, and popularity. The change in these factors influences the customers desire to buy a product or get services. Furthermore, demand might change in quantity primarily due to the necessity of goods or services. Economists believe that a change in the quantity of demand is caused by the increase or decrease of the prices and means the movement along the fixed demand curve. Hence, demand means customers’ preferences and desires to purchase and is influenced by many factors that lead to changes in the quantity of demand.
Factors that Influence Demands
The factors such as taste changes, income, population, price changes, future expectations, and conditions of prices influence the demand curve. Firstly, price changes might increase or decrease demand by providing customers with lower or higher prices of goods or services, so people have a choice based on their possibility to purchase. In addition, price changes are the most important factor that influences demand. Furthermore, income impacts customers ability to buy goods or services; the higher income is, the higher the demands customers have and the more goods or services they can afford to buy. Secondly, preferences in taste might increase or decrease demand by analyzing customers desire to purchase and increasing the demand. Population changes affect the necessity of different goods and products. Lastly, the expectations of future prices might increase or decrease demand by motivating people to purchase due to possible changes in the price of the necessary goods or services. Lastly, when demand increases the equilibrium price also increases and the quantity decreases, on the contrary, when demand decreases, the quantity and price also decrease. Thus, a wide range of factors might change the demand curve, increasing or decreasing it and influencing customers desire to purchase.
Examples of Demand Changes
The article “Expensive Eggs, Cheap Coats: 10 Things With Wild Price Swings in 2022” by Rachel Siegel shows the consequences of inflation influencing the price of different goods and services due to increased demand. Different areas will be influenced by inflation, especially nutrition. The article showed that the demand for food would increase, and as a result, food prices also (Siegel). This change will increase the equilibrium price and increase the equilibrium quantity, due to the inability to meet each person’s demand. It is possible to predict that demand for simple products and food will increase in the future. Food is essential for people, and expectations of a price rise due to inflation will increase the demand for food. The determinant of the demand changes is inflation. The present economic situation is unstable, so people feel uncertain about the future, which affects their needs and demands. The demand for food will rise due to the inability to provide as much product as is needed. Therefore, the article analyzed the impact of inflation on the demand for food, and it shows that this variable will increase.
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Work Cited
Siegel, Rachel. “Expensive Eggs, Cheap Coats: 10 Things with Wild Price Swings in 2022”. The Washington Post, Web.