Question

Use the equation to answer the next questions: Qd = f (P1,P2,T,N,I,E)

Q1: What could cause the current demand for Nike shirts to increase? Explain.

Q2: What could cause an increase in the quantity demanded for Nike shirts? Do not forget to supply curve shifters in the answer.

Answer 1

P1 - Price of the good

P2 - Price of related good

T - Taste of good

N - New goods

I - Income

E - Expectations

1) Change in current demand would occur from P2 / T / N / I / E.

A increase in price of related good will increase the demand for Nike.

Change in taste for Nike products will raise the demand for it.

If there is less supply of goods by other companies, demand of Nike will rise.

If there in increase in income of consumer, demand for Nike products will rise.

If expectations regarding Nike products rises, demand for it will rise.

2) Change in quantity demanded will occur only from the change in price(P1) of the good. If there is rise in price, quantity demanded will fall and vice versa. When price rises, Nike also tries to raise their supply to gain maximum profit from the market.