Question

- List three factors that could affect the demand for tablet computers. In your response explain each factor and whether it would cause the demand curve to shift to the right or to the left and why.

- List three factors that could affect supply of tablet computers. In your response you will want to explain each factors and whether it causes the supply curve to shift to the right or left and why.

Answer 1

1. Demand: Demand for a commodity refers to the desire to buy a commodity backed with sufficient purchasing power and the willingness to spend. When demand of a commodity changes due to change in price than it is known as change in quantity demanded and it leads to movement in the demand curve. While when demand of a commodity changes due to change in factors other than price than it is known as change in demand and it leads to shift of demand curve either rightward or leftward. Determinants of demand for a good:

a. Price of related goods: Demand for a commodity is also affected by the change in the price of related goods like substitute goods or complementary goods. Substitute goods are those goods which are used in place of one another. Increase in the price of one good increases the demand of other good and vice-versa. On the other hand, complementary goods are those goods which jointly satisfy a particular want of consumer. An increase in the price of one good decreases the demand of other good. It causes shift of demand curve either rightward or leftwards.

b. Income of the consumer: Increase in the income of consumer increases the demand of tablet computers if it is a normal good while reduces the demand of tablet computers if it is inferior good. It causes shift of demand curve either rightward or leftwards. Increase in the income shifts the demand curve rightwards for normal good and shifts leftwards for inferior goods and vice-versa.

c. Taste and Preference of the consumer: If consumers have favorable taste and preference for the tablet computers then demand of tablet computers increases and vice-versa. Favourable taste and preference for the tablet computer shifts demand curve rightwards and unfavorable taste for the commodity shifts it leftwards.

2. Supply of a commodity refers to a schedule showing various quantities of a commodity that the producers are willing to sell at different possible prices of the commodity at a point of time. Law of supply states that there is a direct relationship between the price of a commodity and its quantity supplied, keeping other factors constant. Therefore, more is supplied at a higher price and vice-versa.

Determinants of Supply:

Number of firms: Market supply of a tablet computers depends upon the number of firms in the market. An increase in the number of firms implies an increase in market supply and vice-versa. It causes shift of supply curve either rightward or leftwards.

Price of factors of production: If the factor price decreases, the cost of production reduces. Due to this more of the commodity is supplied at its existing price. Inversely, increase in factors price increases the cost of production and lead to less supply of commodity. It causes shift of supply curve either rightward or leftwards.

Change in technology: Improvement in the technique of production reduces the cost of production and increases supply and vice-versa. It causes shift of supply curve either rightward or leftwards.