MARKET _— BUYER= CONSUMER SELLER= PRODUCER | SUPPLY DEMAND Progver PRICEDEMAND DEFINITION: THE AMOUNT OF PRODUCT A CONSUMER IS a. WILLING ( HAS THE NEED OR WANT) b. ABLE (HAS ITS PRICE OR PURCHASING ABILITY) TO PURCHASE DURING A SPECIFIC PERIOD OF TIME USUALLY ONE YEAR AT A GIVEN PRICE DEMAND= WILLINGNESS (NEED AND WANT) + ABILITY (PURCHASING POWER) LAW OF DEMAND DEMAND CURVE THE RELATIONSHIP BETWEEN PRICE (P) Pp AND QUANTITY DEMANDED (Qd) AS P INCREASE, Qd DECREASE, OTHER pe FACTORS ARE CONSTANT AND VICE Pa VERSA ANY CHANGE IN PRODUCT PRICE ‘CAUSE A MOVEMENT ALONG D CURVE OTHER FACTORS ARE be ‘CONSTANT IT IS A NEGATIVE RELATIONSHIP Cadi das QaFACTORS AFFECTING DEMAND (P IS CONSTANT) P D D+ P CONSTANT ad ad Qa a+ 1. CONSUMER INCOME WHEN CONSUMER INCOME INCREASE, D INCREASE THEREFORE, NORMAL GOOD BUT, THER IS INFERIOR GOODS, WHEN INCOME INCREASE, D DECREASE 2. CONSUMER TASTES AND PREFERENCES IF CONSUMER TASTE AND PREFERENCES ARE FAVOURING A CERTAIN PRODUCT, D WILL INCREASE 3. PRODUCT QUALITY AND VALUE ADDED IF PRODUCT QUALITY IS HIGH, D WILL INCREASE IF A PRODUCT HAS AN ADDED VALUE LIKE AFTER SALE SERVICE, D WILL INCREASEFACTORS AFFECTING DEMAND (P IS CONSTANT) P D D+ P CONSTANT ad Qa ed ade 4, ADVERTISING AND PROMOTION PROPER ADVERTISING CAMPAIGN INCREASE DEMAND 5. EXPECTED FUTURE PRICES IF PRICES ARE EXPECTED TO INCREASE IN THE FUTURE, D WILL INCREASE NOW AND VICE VERSA 6. EXPECTED FUTURE INCOME OR CREDIT PURCHASE IF INCOME IS EXPECTED TO INCREASE DEMAND WILL INCREASE 7. NUMBER OF CONSUMERS OR TOTAL POPULATION IF NUMBER OF CONSUMERS INCREASE, D WILL INCREASEFACTORS AFFECTING DEMAND (P IS CONSTANT) P D D+ P CONSTANT Qa Qa ee a+ 8, RELATED PRODUCTS a. SUBSTITUTE PRODUCTS TWO COMPETITIVE PRODUCTS WITH SAME QUALITY, GIVING SAME CONSUMER, EXPERIENCE IF P OF PRODUCT A INCREASE, D ON PRODUCT B INCREASE b. COMPLEMENTS PRODUCTS MUST BE USED TOGETHER IF P OF PRODUCT X INCREASE, D ON PRODUCT Y DECREASEFACTORS AFFECTING DEMAND (P IS CONSTANT) Qa D+ ad D+ SHIFT RIGHT D- SHIFT LEFT a+ P CONSTANT Qa PRICE CHANGES (OTHER FACTORS ARE CONSTANT) P D CHANGE IN P, MOVEMENT ALONG THE CURVE Qa Qd- gd Qd+