Question 1,
Factors of Demand
Demand is the desire and ability to consume certain quantities of a good or service at certain prices at a particular point of time. Factors of demand include the price of goods or service, level of income, taste and reference, health awareness and price of other related goods. When the price of good or service increases, the quantity demanded will decrease. When the price of good or service decreases, the quantity demanded will increases with the assumption of ceteris paribus. There is an inverse relationship between price and the quantity demanded as shown in graph A. Price of the goods is the main factor to customers to make choices while the other factors remained unchanged. The supplier will lower the price of goods when the demand decreases to cope with market surplus.
Factors of Demand
Demand is the desire and ability to consume certain quantities of a good or service at certain prices at a particular point of time. Factors of demand include the price of goods or service, level of income, taste and reference, health awareness and price of other related goods. When the price of good or service increases, the quantity demanded will decrease. When the price of good or service decreases, the quantity demanded will increases with the assumption of ceteris paribus. There is an inverse relationship between price and the quantity demanded as shown in graph A. Price of the goods is the main factor to customers to make choices while the other factors remained unchanged. The supplier will lower the price of goods when the demand decreases to cope with market surplus.
2.) Level of Income
When the
level of income of consumer increases, consumers have a greater ability to buy
goods. Consumers will tend to purchase the good more, therefore the quantity
demanded rises. On the contrary, when the level of income of consumer
decreases, consumers have a smaller ability to buy goods
3.) Taste and Preferences
3.) Taste and Preferences
Taste is
the desire and preference towards goods or services. When the taste of
consumers towards a certain good increases, the quantity demanded of the good
increases. If the consumer prefers good A over god B, the demand for good A
rises even though prices of both goods remain constant.
4.) Health Awareness
Consumers tend to consume healthy food like vegetables instead of junk food when they realize their body is not in a favourable condition. Therefore, the quantity demanded of vegetables will increase. On the other hand, quantity demanded of junk food will decreases due to bad health state.
4.) Health Awareness
Consumers tend to consume healthy food like vegetables instead of junk food when they realize their body is not in a favourable condition. Therefore, the quantity demanded of vegetables will increase. On the other hand, quantity demanded of junk food will decreases due to bad health state.
5.) Price of other related goods
A
substitute good is a good can serve as replacements for one another. When the
price of one good increases, demand for the substitute goods increases. This
will only happen when the both goods are substitutes.
On the other hand, complements are goods that can be used together. A decrease in the price of one results in an increase in demand for the complement. When the price of a complementary goods increases, the demand for another goods will decrease.
The graph shown above is showing demand curve is shifted to the right to show an increase in quantity demanded. This shift will occur when demand is affected by other factors other than the price factor.
Question 2,
Factors of Demand in Sustaining Green Environment
Pollution
has been found to be present widely in the environment. Environmental pollution
rate is greatly increasing in our country. Pollutions are threatening our nature
and mankind daily. We should be responsible for our living environment. So, as
a citizen of my country, we should have to protect our green environment for
the sake of the younger generations. There are few demand factors which can
help in sustaining our green environment.
Customers’
taste and preferences in sustaining green environment. Customers are more
concern when it comes to saving and conserving more electric. Customers who are
concern about saving electric can purchase a product that can use efficiently
and saving more electric at the same time. In Tesco, a huge LED television is
displayed to encourage customers to buy a better power saving product. LED
televisions are proven to consume less power and produce less heat to
surrounding. LED televisions are proven to maximise the colour output and
minimise the risk of damaging human’s vision.
Price
factor in sustaining green environment. Soon after the government had
established “No Plastic Bag Day”, the overall usage of plastic bags had
decreased remarkably. Every hypermarket includes Tesco will not supply plastic
bags to buyers on Saturday. By doing so, Customers of Tesco are encouraged to
bring their own recyclable bag in other words “Green-Bag” to carry their
stuffs. Every purchase of plastic bags on Saturday will cost 20cents more.
Customers will tend to pay at a cheaper price rather than an expensive price.
Therefore, an increase in price of plastic bag will lead to decrease in demand
of plastic bag.
Health awareness in sustaining green environment. When customers realise their health is not in a favourable condition, consumers tend to consume healthy organic food like organic vegetables. Organic foods are non-genetically modified food and are safe to be consumed. Thus, water pollution will decreased in a way of washing it.
QUESTION 3
a.)
The pie chart above is based on our survey on customer in Tesco. The changes that happened to Tesco’s goods price is very elastic. The proportion in blue has shown a majority of 80% customers will not shop in Tesco if there is an increase in price. This shows that changes in price is very elastic. When there is a an increasing in the price, demand will decrease. Customer will shop in hypermarket other than Tesco.
b.)
The changes
occurred to the other hypermarket price is considered inelastic as majority of
the consumers at Tesco were not affected by the price change shop at other
hypermarket. This concludes that a decrease in price does not make a huge
difference in Tesco’s demand.
c.)
The graph above shows that majority (70% of the consumers) would buy more items from Tesco if the income of one increases. This is considered elastic as the increase in number of purchase of these products will also cause an increase in demand. As a conclusion, an increase in income for the customers will cause an increase in their demand.
The graph above shows that majority (70% of the consumers) would buy more items from Tesco if the income of one increases. This is considered elastic as the increase in number of purchase of these products will also cause an increase in demand. As a conclusion, an increase in income for the customers will cause an increase in their demand.
