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Economics Theory
1. Factors that cause shift in demand Change in popularity/tastes/fashion/habits
Popularity of an object changes over time along with tastes, fashion and habits, causing consumers to purchase different products, thus leading to a shift in demand

Change in consumers income Change in a consumers income changes a consumers purchasing ability, thus leading to a shift in demand

Change in prices of substitute goods Rise in prices of substitute goods result in an increase in demand of the original product

Demand for complementary goods Demand for complementary goods are directly related to the demand of the original product

Advertising Advertising could affect product awareness, leading to a change in purchase, thus causing a shift in demand

2. Factors that cause shift in supply Price of the substitutes: The supply of particular goods is inversely related to the price of its substitutes Change in production costs The supply of particular goods is inversely related to production costs Taxation and subsidies Taxing causes shift to left while subsidies cause shift to right

Number of producers

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The more producers, the larger the supply

3. Difference between quantity demanded and demand Demand refers to the entire relationship between prices and the quantities of a given product or service purchased Quantity demanded refers to how much of the product is demanded at one particular price.

4. Factors that affect PED Availability of substitutes The more possible substitutes, the greater the elasticity

Degree of necessity or luxury The more luxury, the greater the elasticity

Proportion of the purchaser's budget consumed by the item Products that consume a large portion of the purchaser's budget tend to have greater elasticity

Time period considered Elasticity increases over time as consumers have more time to adjust their behavior

5. Factors that affect PES Time period considered Elasticity increases over time as the producers have more time to adjust their supply Availability of resources The more common the resources needed, the more elastic the product Number of producers More producers mean that the supply is more elastic

Improvement in Technology

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The more improvement in technology in a market, the more elastic the products are

Stock of finished goods The more stocks available, the more elastic the product

Ease of factor substitution The easier it is to switch capital and labor, the more elastic the product