Topic: The Factors that affect the Demand and Supply for goods and services in markets:

Some of factors that affect the demand for goods and services given ceteris paribus are the following:

(1)Changes in the Price of a good or service

(2)Changes in consumers’ Income spent on goods and services

(3)Changes in the Tastes/Preferences of consumers for goods/services

(4)Changes in the Prices of related goods and services: Substitutes and Complements

(5)Changes in government fiscal policy (spending and taxation) and monetary policy (interest rate etc)

(6)Natural disasters (storms, hurricanes, earthquakes, tornadoes, floods etc)

(7)Scientific discoveries (medical, chemical etc)

(8)Advertising or Commercial ads

(9)Changes in the growth rate of a Population

(10)The # of consumers in a market

(11)Seasonality (Christmas, Easter, Valentines Day etc)

(12)Sociological factors (age, sex, education, marriage etc)

Concisely expressed the above factors that influence demand can be expressed as follows:

D =(∆P, ∆M , ∆T, ∆Prg, ∆Gp, N, S, A, ∆P, #C, S, Sf)

Some of factors that affect the supply for goods and services are the following:

(1)Changes in the Price of a good or service

(2)Changes in Technology (or the State of the Art) of business firms

(3)Changes in the Tastes/Preferences of consumers for goods/services

(4)Changes in consumers’ Income spent on goods and services

(5)The # of business firms in an industry

(6)Changes in the Prices of related goods and services

(7)The Costs of factor inputs of firms (labor, capital etc)

(8)Seasonality (Christmas, Easter, Valentines day etc)

(9)Commercial ads or Advertising

(10)Scientific Discoveries (medical, inventions, chemicals etc)

(11)Natural Disasters

(12)Government fiscal and monetary policies

(13)The rate of growth of the Population

(14)Sociological factors (age, sex, education, marriage etc)

Concisely expressed the above factors that influence the supply schedule or curve can be expressed as follows:

S=( ∆P, ∆M , ∆T, ∆Ty, #F, ∆Prg, ∆Cf, ∆Gp, N, S, A, ∆P, S, Sf)

The non-price factors that cause a rightward or outward shift or a leftward or inward shift in the demand schedule (curve) for a good or service are the following:

SOME NON-PRICE FACTORS THAT AFFECT A DEMAND SCHEDULE

(Please see corresponding diagrams illustrating the appropriate shifts in a consumer’s demand curve (schedule) discussed in class)

(1)Changes in consumers’ Income spent on goods and services

(2)Changes in the Tastes/Preferences of consumers for goods/services

(3)Changes in the Prices of related goods and services: Substitutes and Complements

(4)Changes in government fiscal policy (spending and taxation) and monetary policy (interest rate etc)

(5)Natural disasters (storms, hurricanes, earthquakes, tornadoes, floods etc)

(6)Scientific discoveries (medical, chemical etc)

(7)Advertising or Commercial ads

(8)Changes in the growth rate of a Population

(9)The # of consumers in a market

(10)Seasonality (Christmas, Easter, Valentines Day etc)

(11)Sociological factors (age, sex, education, marriage etc)

PS: The changes in the price of a good or service in any market will only cause a movement along a consumer’s demand curve (schedule) given that all the non-price factors are held constant or given ceteris paribus. Thus a change in the price of a good or service will only cause a change in the quantity demanded or Qd of a good or service in a market in a given time period given the assumption of ceteris paribus. See diagram (graph) of demand curve for DVD players discussed in class.

The non-price factors that cause a rightward or outward shift or a leftward or inward shift in the supply schedule (curve) for a good or service are the following:

SOME NON-PRICE FACTORS THAT AFFECT A SUPPLY SCHEDULE (Please see corresponding diagrams illustrating the appropriate shifts in a firm’s supply curve (schedule) discussed in class)

(1)Changes in Technology (or the State of the Art) of business firms

(2)Changes in the Tastes/Preferences of consumers for goods/services

(3)Changes in consumers’ Income spent on goods and services

(4)The # of business firms in an industry

(5)Changes in the Prices of related goods and services

(6)The Costs of factor inputs of firms (labor, capital etc)

(7)Seasonality (Christmas, Easter, Valentines day etc)

(8)Commercial ads or Advertising

(9)Scientific Discoveries (medical, inventions, chemicals etc)

(10)Natural Disasters

(11)Government fiscal and monetary policies

(12)The rate of growth of the Population

(13)Sociological factors (age, sex, education, marriage etc)

S=( ∆M , ∆T, ∆Ty, #F, ∆Prg, ∆Cf, ∆Gp, N, S, A, ∆P, S, Sf)

PS: The changes in the price of a good or service in any market will only cause a movement along a firm’s supply curve (schedule) given that all the non-price factors are held constant or given ceteris paribus. Thus a change in the price of a good or service will only cause a change in the quantity supplied or Qs for a good or service in a market in a given time period given the assumption of ceteris paribus. See diagram (graph) of supply curve for DVD players discussed in class.