Changes
to Demand
There
are four main determinants of demand.
They are:
-
Preference
-
Income
-
Prices
of related products
-
Future
expectations
There are also a few other determinants, including Size
of the market population (a growing population means demands goes up) and change
in distribution of income.
A great example of changes to demand would be Tim Horton’s. During the cold winter in Canada, people are
often stopping by Tim Horton’s for a hot coffee. But when summer hits, the demand for an ice
cap rises dramatically. This is due to
the consumer’s preference toward the product. With the same scenario, Tim Horton’s can also experience
a change of demand (decrease) if their competitors were to put a similar
product on sale, or boost in advertisement towards their brand. For example, second cup’s Chiller, Starbuck’s
ice Frappuccino, or even McDonald’s Ice Blended latte. This would be an example of “substitute
product”.
The following graph is a mock example of changes in
demand for Tim Horton’s Ice cappuccino:
This if great example. I would just clarify the gragh stating that the D1 is for Iced Cappuccino in winter and D2 is for Iced Cappuccino for summer.Am I right with my conclusion?
ReplyDeleteThat would be correct olha!! thank you for the comment, i should have stated it better on the graph!!
ReplyDelete