Question
Study the following table of the demand and supply of product x.
Explain five factors that may have led to the trend above.
Explain five factors that may have led to the trend above.
Answer
(i) Government policy
The government may have come up with policies that have discouraged the consumption of project x by levying heavy taxation on the product, lack of subsidies and laws and regulation that have discouraged consumption which have led to this trend.
(ii) Uneven distribution of income
Demand for goods and service is usually higher when incomes are distributed among many people as opposed to where incomes are in the hands of few people. A change in this trend explains that there is uneven distribution of incomes which has led to a decrease in the quantity demanded.
(iii) Decrease in population
There is a decrease in population which has led to a decrease in demand for goods x while the composition of the population in terms of its sex. Age, economic stats and education structure will also affect the demand for the product.
(iv) Terms of sale
The demand for goods and services can increase if and when favorable terms of sale are offered to consumers. The terms of sale my include offering goods on credit, giving discounts etc. So for this case may be these was a decrease in the availability of credit or introduction of tougher credit terms which has led to a reduction in demands for the goods and services.
(v) Negative change in tastes fashion and preferences of consumers
Individual's tastes have a great influence on the demand for a commodity. If the consumer develops a negative taste for a particular product, then this will clearly be reflected with a decrease in the quantity demanded. So in this case, the consumers might have a negative taste and a preference of product x.
The government may have come up with policies that have discouraged the consumption of project x by levying heavy taxation on the product, lack of subsidies and laws and regulation that have discouraged consumption which have led to this trend.
(ii) Uneven distribution of income
Demand for goods and service is usually higher when incomes are distributed among many people as opposed to where incomes are in the hands of few people. A change in this trend explains that there is uneven distribution of incomes which has led to a decrease in the quantity demanded.
(iii) Decrease in population
There is a decrease in population which has led to a decrease in demand for goods x while the composition of the population in terms of its sex. Age, economic stats and education structure will also affect the demand for the product.
(iv) Terms of sale
The demand for goods and services can increase if and when favorable terms of sale are offered to consumers. The terms of sale my include offering goods on credit, giving discounts etc. So for this case may be these was a decrease in the availability of credit or introduction of tougher credit terms which has led to a reduction in demands for the goods and services.
(v) Negative change in tastes fashion and preferences of consumers
Individual's tastes have a great influence on the demand for a commodity. If the consumer develops a negative taste for a particular product, then this will clearly be reflected with a decrease in the quantity demanded. So in this case, the consumers might have a negative taste and a preference of product x.
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