Question

what factors affect buyers demand for goods?

what factors affect sellers supply of goods?

how do supply and demand determine the price of a good and the quantity sold?

Answer 1

A) Factors affecting demand of consumer

• Price of good- price of good effect the demand of consumer. With increase in price demand will decrease.
• Income of the consumer- Income also have impact upon the consumer demaand . With increase in income demand increases and with fall in income demand decreases.
• Future expectations- They also have impact on the demand. If consumer expects that in future price will rise then contracts the current demand of goods and services.
• Tastes and preferences- They also have impact upon the demand of consumer. If taste and preferences increase then demand of consumer will increase.

b)Factor affect seller supply of good

• price of the product-price of good effect the supply . With increase in price ,supply will increase.
• Cost of raw material - It also have impact upon the supply. If cost increases then profits of producer will reduce . Therefore supply decreases.
• Government policy- Taxation and subsidy policy of government have impact on supply. If taxes are increased then supply will decrease due to fall in profit while with subsidies provided by the government supply will increase.

c) Supply and demand are correlated because where both intersect equilibrium price and quantity is determined. The reason is that if any of demand and supply increases or decreases then there is change in profit and loss to consumer and producer.