Question

Consider any two factors (determinants) that cause the supply curve to shift for the company you work or one you have worked for in the past. Then, explain what these two factors are, what caused these two factors to change, and how your firm dealt with these changes. Did the changes have the expected or predicted effects on price (P) and quantity (Q)?

Answer 1

Factors that cause the demand curve to change or change are known as demand determinants. The law of demand states that commodity prices and demand are interrelated. This means that the higher the prices, the lower the demand and the lower the prices. These are other factors that remain constant. Factors other than product cost.

The law of demand takes into account the main factors of the change in demand for goods, i. The price of goods. But demand is influenced by many factors other than prices. These other factors lead to a change in the demand curve when prices remain the same. The demand curve shifts left or right due to factors other than price. On the other hand, changes in commodity prices move along the same demand curve, which can go up or down.

The main factors or determinants of demand are as follows

1. Commodity Price: A key factor in changing the demand for a product is its price change. A drop in prices will lead to an increase in the demand curve, and a rise in commodity prices will lead to a decline in demand. For example, an increase in the price of tea will lead to a decline in commodity demand, as consumers who cannot afford the expensive items will now explore other options available.

2. In the graph above, the decline in commodity prices from P to P1 increased the quantity demanded for goods from Q to Q1. This is a movement along the same demand curve. In this case, the movement drops from A to B. Also, rising prices from P to P2 have reduced demand from Q to Q2. In this case the movement goes from A to C