Question

What are the key determinants of demand and supply? Choose one of each and explain with an example.

Answer 1

Determinants of Demand

• Number of buyers
• The consumer's income
• The price of substitute good available.
• Consumer preferences.

Let me explain the key determinant Number of buyers

• The number of buyers shift the demand curve when they change.
• When the number of buyers decreases, the demand decreases.
• When the number of buyers increases, demand rises.

Determinants of supply

• Resources cost
• Technology
• Number of sellers
• Taxes

Lets consider tax

• Tax shift the supply curve left
• The tax and subsidies can increase supply
• The business tax decreases the supply.
• Since the tax increases the production and selling cost, it could decrease the supply

Thanks