Along with Supply, Demand is one of the two leading factors that determine the price of the market. So What is a bridge?? What factors affect market demand in macroeconomics? Top Business Find out details below?
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What is a bridge?
What is the concept of bridge?
Bridge (English: Demand) is the amount of a good or service that consumers are willing to buy at different prices in a given time period.
Other concepts of demand in macroeconomics:
- Law of demand: when the price of a good increases, the quantity demanded of that good decreases (the price increases, the demand decreases). Bridge includes:
- Individual demand (or quantity demanded): is the quantity of goods/services that a buyer wants to buy at a specific price, in a certain period of time. Therefore, quantity demanded makes sense only when tied to a particular price.
- Market demand: The demand of all individuals for a good in a combined economy.
- total demand: The demand of all individuals for all goods in the combined economy.
What is the concept of a bridge?
Bow (English: Supply) is the amount of a good or service that sellers are willing and able to sell at different prices during a given period of time. To learn more about the bow, you can check out the article: What is a bow?
Factors affecting demand
1. Consumer income
Consumer income is the leading factor affecting demand in a given time period. Because the income of farmers will directly affect the purchasing ability of consumers. When consumer income increases, the demand for goods will also increase and vice versa.
Example: As your monthly salary increases, you will buy more personal items, hoard money to travel or engage more in recreational needs. As for the situation of complicated epidemic, the income is reduced, the need to buy personal consumption goods, travel or entertainment activities will decrease.
Factors affecting demand
2. Prices of goods and services
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The demand for a good depends not only on the price of the good itself but also affected by the prices of related goods.
Example: When the price of chicken drops, consumers will tend to buy more chicken as a substitute for pork because chicken and pork are both commodities that can satisfy similar needs in each meal. Vietnamese family.
The price of one good reduces the quantity demanded of another good are called substitutes. Pairs of substitutes often satisfy a common need.
Example: Chicken and pork; carrots and radishes; broccoli and spinach…
When the price of one good increases the quantity demanded of another, it is called a complementary good. Complementary goods are often used together to promote value.
Example: Motorcycle and gasoline; computers and software; phones and mobile games.
Price affects demand
3. Psychology, habits and tastes of consumers
When If consumers like a certain product, they will buy it more other goods to substitute whether the same function is the same.
For example: Vietnam is a country that loves pork and in 2020 pork production is 3.46 million tons, poultry meat is only 1.42 million tons, although these two types of meat mostly have the same function. in Vietnamese meals.
However, studying consumer psychology and habits is extremely complicated. Especially in recent years, the introduction of new services, shorter life cycles (Social Networks, Virtual Reality Games, 3D Movies...) make it increasingly difficult for economists.
4. Market Expectations
Consumer expectations may affect your needs in the present.
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For example: If you want to make more money in the future, you spend a lot of time researching and buying yourself online courses, foreign languages because you believe these are skills that will help you improve your income in time. Upcoming.
Or if consumers expect the price of that good to fall in the future, they won't buy it now.
For example: The promotions of e-commerce platforms Shoppe, Tiki, Lazada ... discount, free shipping, a lot of people wait for such days to buy goods at a cheaper price.
Market expectations affect demand
5. Population
Population is power create market Therefore, this is a factor that greatly affects the quantity demanded of a commodity. As the population increases, the amount of goods must also increase to meet human needs.
But because the production capacity and income of all segments of society are not the same, as the population size increases, the demand structure will also change.
For example: The poverty rate decreases, the demand for food decreases, higher-value goods increase, and more entertainment needs are met.
6. Government policy
Government policies will directly affect the income of consumers and the prices of goods and services. Therefore, affecting the demand for goods.
For example: For goods that need to be limited in consumption, the State sets a high tax rate, making the selling price high, leading to a decrease in demand and vice versa.
In short, what is a bridge?
Bridge is the amount of a good or service that consumers are willing to buy at different prices in a given time period. The six biggest factors affecting market supply are: consumer income, prices, spending habits, market expectations, population, and government policies.
Demand is part of the law of supply and demand, to better understand this rule you can review the article: What is supply and demand? Law of supply and demand and market prices, currencies.
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