Which of the following could be a demand determinant of cell phones?
Answers
- current demand will decrease in anticipation
- purchasing power has increased
- price of a related good. price of data package (complementary good) goes down, demand for smartphone goes up
Your question is incomplete. The complete question is here-
Which of the following could be a demand determinant of cell phones?
- Government increases regulations on cell phone manufacturers.
- A new model of smart phones is released in the market.
- Japanese touch screen factories are destroyed in an earthquake.
- Government increases taxes on cellular phone production.
Answer
The demand determinant of cell phones is a new model of smart phones is released in the market.
Explanation
The demand determinants of a product are:
1. Income Level: It effects the demand of a product. The more is the level of income, the high is the demand of a product.
2. Growth of population: It also effects the demand of the product. The more is the growth in population, the more will be the demand.
3. Substitutes availability: If any substitute good is available in the market then the demand of the product will depend upon the price of the substitute good, if price of substitute good rises then demand of the product will increase and vice-versa.
4. Tastes and preferences: This is another determinant of demand of the product.
In the given question,
Option 1 says that government is increasing regulation on cell phone manufactures, it is not a determinant of demand as it is not effecting the demand of a product.
Option 2 is a new model of smart phone is released, hence people's demand will get effected as they will shift towards the new model.
Option 3 will not be the answer because factory is been destroyed by a natural calamity which is again not a determinant of a demand.
Option 4 will not be the answer since government increase is taxes is not directly effecting the demand of cell phones.
Hence, the answer is option 2.
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