state the causes of an increase in demand.Explain any three of them.
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shift to the right in the demand curve can occur for a number of reasons:
Income. An increase in disposable income enabling consumers to be able to afford more goods. Higher income could occur for a variety of reasons, such as higher wages and lower taxes.Quality. An increase in the quality of the good e.g. better quality digital cameras encourage people to buy one.Advertising can increase brand loyalty to the goods and increase demand. For example, higher spending on advertising by Coca Cola has increased global sales.
Substitutes. An increase in the price of substitutes, e.g. if the price of Samsung mobile phones increases, this will increase the demand for Apple iPhones – a major substitute for the Samsung.Complements. A fall in the price of complements will increase demand. E.g. a lower price of Play Station 2 will increase the demand for compatible Play Station games.Weather: In cold weather there will be increased demand for fuel and warm weather clothes.Expectations of future price increases. A commodity like gold may be bought due to speculative reasons; if you think it might go up in the future, you will buy now.
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Income. An increase in disposable income enabling consumers to be able to afford more goods. Higher income could occur for a variety of reasons, such as higher wages and lower taxes.Quality. An increase in the quality of the good e.g. better quality digital cameras encourage people to buy one.Advertising can increase brand loyalty to the goods and increase demand. For example, higher spending on advertising by Coca Cola has increased global sales.
Substitutes. An increase in the price of substitutes, e.g. if the price of Samsung mobile phones increases, this will increase the demand for Apple iPhones – a major substitute for the Samsung.Complements. A fall in the price of complements will increase demand. E.g. a lower price of Play Station 2 will increase the demand for compatible Play Station games.Weather: In cold weather there will be increased demand for fuel and warm weather clothes.Expectations of future price increases. A commodity like gold may be bought due to speculative reasons; if you think it might go up in the future, you will buy now.
Hope this helped!
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