ECN 112 Assignment 1
Demand
25 points
Demand is defined as the relationship between the quantity demanded and the price of the good when all other influences on buying plans remain the same. When those influences don't remain the same demand changes. We depict that change by shifting the demand curve to the right (increase) or to the left (decrease.)
1. Pick a business that you know something about or can find information on. Describe the business and its main product or service. (1 points)
2. For each of the factors that influence Demand, describe how your main product or service (described in 1.) is affected. Does the factor indicate that demand is increasing or decreasing?
2.1 Price of substitutes - What is a substitute for the product or service? Is the substitute's price increasing or decreasing? How does this affect demand for your product or service? (3 points)
2.2 Price of complements - What is a complement for the product or service? Is the complement's price increasing or decreasing? How does this affect demand for your product or service? (3 points)
2.3 Consumer Income - Is consumer income increasing or decreasing? How does this affect demand for your product or service? (3 points)
2.4 Consumer preferences - How are consumer preferences changing? How does this affect demand for your product or service? (3 points)
2.5 Consumer expectations of income - Do consumers expect their incomes to increase or decrease? How does this affect demand for your product or service? (3 points)
2.6 Consumer expectations of price (of your product or service.) - Looking ahead, do consumers expect the price of your product or service to increase or decrease? How does this affect demand for your product or service? (3 points)
2.7 Number of Consumers (Buyers) - Is the number of buyers increasing or decreasing? How does this affect demand for your product or service? (3 points)
3. Based on your answers to 2.1 - 2.7, is the demand for your product or
service increasing or decreasing? Why? (3 points)
Please type up your answers. If you prefer, you can e-mail me your assignment.
A note on retail businesses: Retailing is a service. Many people confuse the products the business sells with the retail service that they provide. If your business sells a lot of products which you don't manufacture, then you need to be looking at the retail service, not the product itself.
A note on what I'm looking for: Tell me what you think is happening in the marketplace, not just what could happen. For example, telling me that something is a substitute for your product or service is helpful. It is even more helpful to tell me that if the substitute's price increases that increases the demand for your product or service. However, you must tell me what is really happening - is the price of the substitute increasing or decreasing? If you don't know for sure give me your best guess.