The Kilimanjaro Institute of Technology and Management Assignment PDF

   

Added on  2021-05-17

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THE KILIMANJARO INSTITUTE OF TECHNOLOGY AND MANAGEMENT NAME OF TUTOR: MADAM ERNESTINA SUBJECT NAME: PRINCIPLES OF ECONOMICS TASK: INDIVIDUAL ASSIGNMENT COURSE NAME: BUSINESS ADMINISTRATION STUDENT NAME: EUNICE OTAIGO REGISTRATION NUMBER: KITM/0430/DBA/020QUESTION: Discuss the factors affecting demand and supply
The Kilimanjaro Institute of Technology and Management Assignment PDF_1
DEMANDDemand is defined as the different quantities of a good or service that consumers are willing and able (ready) to buy at different prices within a given time period.Demand is represented by the whole demand schedule and the entire demand curve. WherebyDemand schedule is a table that lists the quantities of a good a consumer is willing and able tobuy at each price level in a given time period, when all other things remain the same anddemand curve is a graphical representation of the demand schedule. Demand curve can beconsidered as the willingness-and-ability-to-pay curve. It shows the maximum price a consumeris willing to pay for that quantity of a good or service. The law of demand shows an inverse (negative) relationship between price and quantitydemanded everything else remains the same. Quantity demanded of a good increases in agiven time period as its price falls. The opposite is true; consumers will buy less if the price ofthe good is high. Because of the law of demand, demand curve has negative slope (isdownward sloping) the inverse relationship between price and quantity demanded depends ontwo factors: Substitution effect: When the relative price (opportunity cost) of a good or servicerises, people seek substitutes for it, so the quantity demanded decreases.Factors affecting demand are as follows: Change in Consumers’ IncomesThe influence of consumers' income on demand depends on whether the good is normal goodor inferior good, For a normal good, an increase in income increases demand for the good andshifts the demand curve rightward; (examples include cloths, cars, vacations) and For an inferiorgood, an increase in income decreases demand for the good and shifts the demand curveleftward. Examples of inferior goods include used cars or used furniture. Inter-city bus isanother example of an inferior good.
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