Factors Affecting the Demand and Supply.pptx

Discussion on Determinants of Demand and Determinants of Supply

1. FACTORS AFFECTING THE DEMAND & SUPPLY

2. Determinants of Demand NON – PRICE FACTORS  PRESENTATION TITLE 2 1. INCOME – People buy more goods and services when their income increases, but will buy less if their income decreases, thus, affecting the demand for goods and services.  2.  TASTES AND PREFERENCES - Demand for goods and services increases when people like or prefer them. Such tastes or preferences are greatly influenced by advertisement or fashion. On the other hand, if a certain product is out of fashion, the demand for it decreases.

3. Determinants of Demand NON – PRICE FACTORS  PRESENTATION TITLE 3 3. PRICE EXPECTATIONS – When the people expect the prices of goods, they will buy more of these goods. In the same manner, they decrease their demand for each product if they expect price to decline tomorrow or in a few days 4.  PRICES OF RELATED GOODS - When the price of a certain good increases, people tend to buy substitute products.

4. Determinants of Demand NON – PRICE FACTORS  PRESENTATION TITLE 4 COMPLEMENTARY PRODUCTS – (those that go together) like sugar and coffee, is different. If the price of sugar increases, the price of coffee increases. But, if the demand for sugar decreases, the demand for coffee decreases. 5.  POPULATION - More people means more demand for goods and services.

5. PRESENTATION TITLE 5 Brain in Activity

6. PRESENTATION TITLE 6 Brain in Activity

7. Show the changes that occurs in the demand of a particular product as influenced by the aforementioned factors. Write on the blank whether the demand will increase  or the demand will decrease  . __ 1. Bandwagon effect, where the population is growing (potential demand) __ 2. Increase of the income of the consumers (for normal goods) __ 3. Decrease of the income of the consumers PRESENTATION TITLE 7

8. Show the changes that occurs in the demand of a particular product as influenced by the aforementioned factors. Write on the blank whether the demand will increase  or the demand will decrease  . __ 4. The product is out of the trend __ 5. The consumers are expecting that the price of commodities will increase __ 6. Decrease in the price of complementary products. PRESENTATION TITLE 8

9. Show the changes that occurs in the demand of a particular product as influenced by the aforementioned factors. Write on the blank whether the demand will increase  or the demand will decrease  . __ 7. Increase in the price of alternative products. __ 8. The consumers are expecting that the price of commodities will decrease. __ 9. Increase in the price of complementary products. __ 10. Decrease in the price of alternative products. PRESENTATION TITLE 9

10. DETERMINANTS OF SUPPLY

11. Determinants of Supply NON – PRICE FACTORS  11 1. Technology This refers to techniques or methods of production. Modern technology which uses modern machines increases supply of goods. 2. Cost of Production When we speak of the cost of production, we take in to consideration the price of raw materials which are needed together with the cost of labor . As the price of raw materials or the salaries of laborers increases, it means higher cost of production. Higher cost of production decreased supply because the viability or profitability of the business decreases.

12. Determinants of Supply NON – PRICE FACTORS  12 3. Number of Sellers More sellers or more factories means an increase in supply. On the other hand, less sellers or factories mean less supplies . 4. Taxes and Subsidies Certain taxes increase cost of production. Higher taxes discourage production because it reduces the earnings of businessmen. In the case of subsidies, there are financial grants or financial assistance to producers. Clearly, subsidies reduce cost of production. This induces businessmen to produce more.

13. Determinants of Supply NON – PRICE FACTORS  13 5. Weather Production of goods also depends on weather conditions. A businessman will produce more sweaters during cold season, more umbrellas during rainy season and light clothing materials and walking shorts during summer. 4. Taxes and Subsidies Certain taxes increase cost of production. Higher taxes discourage production because it reduces the earnings of businessmen. In the case of subsidies, there are financial grants or financial assistance to producers. Clearly, subsidies reduce cost of production. This induces businessmen to produce more.

14. Brain in Activity Graphic organizer 14

15. Brain in Activity Show the changes in supply through the shift of the supply curve. 15 Coffee growers must pay a higher wage to the workers they hire to harvest coffee. Storms, insect infestations, and drought affect agricultural production and thus the supply of agricultural goods.  Over the past decade, new cellular phone companies emerged bringing new brand and technology on cellular phones. There is a shift of using DVD to YouTube Channel, Netflix and the like. Oil pumped out of the ground and used today will be unavailable in the future to sell it later when the price is higher . A government may introduce stricter regulations on imports of certain products and services . Suppose the government imposes significantly higher taxes on all imported silk . Japan established quotas on imported cars. A natural disaster strikes country A, destroying bakeries across half of the country . The innovation in meat processing technology lowers the cost of producing hamburgers. 

16. Thank you Evelyn B. Marcelino e [email protected]