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    Assingment Learning Activity 1 Ch3-U2

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    Jose Javier Solivan Rivera
    The demand function relates the quantity of goods consumers demand to factors that influence purchases, including price, income, prices of related goods, advertising, preferences, and credit availability. When the price of a good declines, demand increases according to the law of demand. When the price of a substitute good decreases, demand shifts to the substitute but decreases for the original good. If income decreases and a good is inferior, demand increases as the inferior good becomes more affordable.

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    Assingment Learning Activity 1 Ch3-U2

    Uploaded by

    Jose Javier Solivan Rivera
    7 views1 page
    The demand function relates the quantity of goods consumers demand to factors that influence purchases, including price, income, prices of related goods, advertising, preferences, and credit availability. When the price of a good declines, demand increases according to the law of demand. When the price of a substitute good decreases, demand shifts to the substitute but decreases for the original good. If income decreases and a good is inferior, demand increases as the inferior good becomes more affordable.

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    The demand function relates the quantity of goods consumers demand to factors that influence purchases, including price, income, prices of related goods, advertising, preferences, and credit availability. When the price of a good declines, demand increases according to the law of demand. When the price of a substitute good decreases, demand shifts to the substitute but decreases for the original good. If income decreases and a good is inferior, demand increases as the inferior good becomes more affordable.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    7 views1 page

    Assingment Learning Activity 1 Ch3-U2

    Uploaded by

    Jose Javier Solivan Rivera
    The demand function relates the quantity of goods consumers demand to factors that influence purchases, including price, income, prices of related goods, advertising, preferences, and credit availability. When the price of a good declines, demand increases according to the law of demand. When the price of a substitute good decreases, demand shifts to the substitute but decreases for the original good. If income decreases and a good is inferior, demand increases as the inferior good becomes more affordable.

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    Jose Solivan

    BADM 5020

    Assignment: Learning activity 1 ch 3 -U2

    1) What is a demand function? Which variables determine demand?

    The demand function states the relation between the quantities of goods and services
    consumers demand during a specific period and all the factors that influence the level of
    purchases considering the variables that influence the consumer his decision to acquire the
    product or not.

    The variables that most often affect are:


    - Price of the good
    - Consumer’s income
    - Prices of related goods
    - Advertising expenditures
    - Consumer preferences
    - Credit availability
    - Loyalty and quality of the product

    2) What happens to demand when the following changes occur?

    a. Price of the good X declines.

    When price of the good X declines then demands of good X increases. This is based on the
    Law of Demand which states that there is an inverse relationship between price and
    demand, if a goods price decreases the quantity demanded of these goods increases, as the
    consumer will have more purchasing power and can increase consumption.

    b. The price of a substitute good Y decreases

    When the price of a substitute good Y decreases, the quantity demanded for good Y
    increases, but the demand for the good that it is being substituted for decreases.

    c. Consumer's Income decreases and the good X is inferior

    When consumer income decreases and the good X is inferior, then demand increase as the
    inferior good is more affordable, than an expensive good.

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