explain the factors that shift the demand curve to the right?
Answers
Demand curve is defined as the relationship between price of a certain product/service and the quantity demanded by the consumers for a given time period. Demand curve is generally negatively sloped and shares an inverse relationship with price and quantity demanded.
The shift factors include the following:
1. Increase in income : If the consumer's income increases they will demand more and the demand curve will shift rightwards.
2. Change in preferences: If the consumer preferences change and are positive the demand curve will shift.
3. Complimentary goods: IF price of complimentary goods fall, the demand for its compliments will increase and shift the demand curve rightwards.
4. substitutes: If prices of substitutes increase, the demand for its substitute goods will increase shifting demand rightwards.
5. Market size: If market size increases, demand curve shifts rightwards.
6. Price expectation: if people predict the price of a good to increase in the near future, then they are more likely to purchase sooner, which would increase demand for the product and shift curve rightwards.
Increase in demand refers to the situation when demand of any product increases at a given price, or same demand at a higher price due to favorable changes in factors other than price of goods.
The reasons for this shift maybe:
Increase in the income of consumer.
Increase in the price of substitute goods.
Fall in the price of complementary goods.
Consumer’s taste becoming stronger in favor of that product.