Factors affecting demand and supply

Factors affecting demand:
1 comsumer income
2 the prices of other products
3 tastes and fashion

COMSUMER INCOME:
With more income,consumers have more spending power available,and so buy more of most goods and services.
Such products,where demand increases with an increase in income,are known as normal goods.

THE PRICES OF OTHER PRODUCTS:
The demand for a particular product can also be affected by a change in the price of another,different product.Two possible cases are recognised.These are where there are substitutes and complements to the productin question.

TASTES AND FASHION:
Some people like smoking cigarettes.So eventhough the price of cigarettes increase,people will buy it too.With holiday,some destinations are more fashionable than others.

Factors affecting supply:
1 costs of production
2 size and nature of the industry
3 government policy

COSTS OF PRODUCTION:
There are many thing that can affect the costs of production;any change in any input can have an effect on the firm's profits and willingness to supply the market.

SIZE AND NATURE OF THE INDUSTRY:
Some industries are more competitive than others.

GOVERNMENT POLICY:
Governments can affect the supply of a product in many different ways.