Could You Briefly Explain What Effect Will Each Of The Following Have On The Demand For Product B?


2 Answers

Anonymous Profile
Anonymous answered
A. If product B become more fashionable its demand will rise the reason is that the demand for goods which form a part of habbits, tastes, and fashion is always inelastic because people prefer to purchase them even though their prices undergoes a big change
B. if price of substitute product C falls the demand for product B will decrease( the demand is generally elastic)
C. When income of a consumer decreases he purchases less of superior good and more of inferior goods so demand of product B will rise(when B is an inferior good)
D. the demand for product B at present time will fall so consumers will buy it when its price will be lower in future
E. if the price of complementary good D falls the demand for product B will rise
e.g increase in price of petrol decreases in demand for cars
or decrease in price of petrol increases the demand for cars
Shumaila Sadia Profile
Shumaila Sadia answered
A. Product B becomes more fashionable would result in high demand.
B. The price of substitute product C falls would lead to low demand since people may switch to the substitute.
C. A good generally becomes inferior when the income rises and in that case the demand decreases according to consumer theory.
D. Consumers anticipate the price of B will be lower in the near future would result in low demand since people would wait for prices to fall.
E. The price of complementary product D falls, increase in demand would be observed for example id the price of DVD players decrease then the demand for DVDs would increase.

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