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    Change in Demand and Supply Due To Factors Other Than Price

    Uploaded by

    Rakesh Yadav
    The document discusses factors other than price that can cause changes in demand and supply for a commodity like Amul milk. It states that demand can increase due to a rise in substitute prices, consumer income, or favorable tastes, shown as a rightward shift of the demand curve. Demand decreases with lower substitute prices, less income, or unfavorable tastes, shown as a leftward shift. Supply increases with lower input prices, more firms, or higher substitute prices, shown as a rightward shift. Supply decreases with higher input prices, fewer firms, or lower substitute prices, shown as a leftward shift. These non-price factors can impact the demand and supply curves.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd

    Change in Demand and Supply Due To Factors Other Than Price

    Uploaded by

    Rakesh Yadav
    500 views4 pages
    The document discusses factors other than price that can cause changes in demand and supply for a commodity like Amul milk. It states that demand can increase due to a rise in substitute prices, consumer income, or favorable tastes, shown as a rightward shift of the demand curve. Demand decreases with lower substitute prices, less income, or unfavorable tastes, shown as a leftward shift. Supply increases with lower input prices, more firms, or higher substitute prices, shown as a rightward shift. Supply decreases with higher input prices, fewer firms, or lower substitute prices, shown as a leftward shift. These non-price factors can impact the demand and supply curves.

    Original Description:

    economics

    Original Title

    Economics Project

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    The document discusses factors other than price that can cause changes in demand and supply for a commodity like Amul milk. It states that demand can increase due to a rise in substitute prices, consumer income, or favorable tastes, shown as a rightward shift of the demand curve. Demand decreases with lower substitute prices, less income, or unfavorable tastes, shown as a leftward shift. Supply increases with lower input prices, more firms, or higher substitute prices, shown as a rightward shift. Supply decreases with higher input prices, fewer firms, or lower substitute prices, shown as a leftward shift. These non-price factors can impact the demand and supply curves.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    500 views4 pages

    Change in Demand and Supply Due To Factors Other Than Price

    Uploaded by

    Rakesh Yadav
    The document discusses factors other than price that can cause changes in demand and supply for a commodity like Amul milk. It states that demand can increase due to a rise in substitute prices, consumer income, or favorable tastes, shown as a rightward shift of the demand curve. Demand decreases with lower substitute prices, less income, or unfavorable tastes, shown as a leftward shift. Supply increases with lower input prices, more firms, or higher substitute prices, shown as a rightward shift. Supply decreases with higher input prices, fewer firms, or lower substitute prices, shown as a leftward shift. These non-price factors can impact the demand and supply curves.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Change in demand and supply due to factors

    other than price


    CHANGE IN DEMAND: Increase or Decrease in demand due to change in
    factors other than price of a commodity (amul milk) like price of related goods,
    income, taste and preferences etc.

    INCREASE IN DEMAND

     Increase in Price of substitute goods- These are those goods which can
    be used in place of each other.
    For e.g. In case of amul milk, substitute can be mother dairy milk
    In such case, increase in the price of mother dairy milk, increases the
    demand for amul milk.
     Increase in income of consumer for normal goods- these are those
    goods whose income effect is positive.
    For e.g. when income of consumer increases, demand for amul milk
    being a normal good also increases.
     Favourable taste for a commodity- if the consumer develops a
    favourable taste for amul milk, the demand for amul milk increases.
    The following graph shows the rightward shift of demand curve.

    Here y axis shows= price

    X axis shows= quantity demanded of amul (in units)

    D1d1= original demand curve

    D2d2=rightward shifted demand curve due to other factors


    DECREASE IN DEMAND

     Decrease in the price of substitute goods- For e.g. In case of amul milk,
    substitute can be mother dairy milk
    In such case, decrease in the price of mother dairy milk, decreases the
    demand for amul milk.
     Decrease in income of consumer for normal goods- For e.g. when
    income of consumer decreases, demand for amul milk being a normal
    good also decreases.
     Unfavourable taste for a commodity- if the consumer develops an
    unfavourable taste for amul milk, the demand for amul milk decreases.

    The following graph shows the leftward shift of demand curve.

    Here y axis shows= price

    X axis shows= quantity demanded of amul (in units)

    DD= original demand curve

    D1D1= leftward shifted demand curve due to other factors

    CHANGE IN SUPPLY: increase or decrease in supply due to change in factors


    other than price of own commodity like price of related goods, input price,
    number of firms etc.

    INCREASE IN SUPPLY

     When the price of related goods (substitute) decreases- when the


    price of mother dairy milk falls in the market, the company/supplier will
    want less of it because it is now less profitable and thus supply of amul
    milk will increase and supply curve will shift to right.
     Reduction in input price- when input price of amul milk decreases,
    marginal cost of production also decreases. This leads to increase in
    profit margin and therefore supply increases.
     Increase in number of firms- more the number of firms of amul milk
    more will be the market supply of amul.
    The following graph shows the rightward shift of Supply curve.

    Here y axis shows= price

    X axis shows= quantity supplied of amul (in units)

    SS= original supply curve

    S’S’= rightward shifted supply curve due to other factors

    DECREASE IN SUPPLY

     When the price of related goods (substitute) increases- when the price
    of mother dairy milk rises in the market, the company/supplier will want
    more of it because it is now more profitable and thus supply of amul
    milk will decrease and supply curve will shift to left.
     Increase in input price- when input price of amul milk increases,
    marginal cost of production also increases. This leads to decrease in
    profit margin and therefore supply decreases.
     Decrease in number of firms- less the number of firms of amul milk less
    will be the market supply of amul.
    The following graph shows the leftward shift of Supply curve.

    Here y axis shows= price

    X axis shows= quantity supplied of amul (in units)

    SS= original supply curve

    S1S1=Leftward shifted supply curve due to other factors

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