Question

In each of the following examples, name the factor that affects demand and describe its impact on your demand for a new cell phone.
a. You hear a rumor that a new and improved model of the phone you want is coming out next year.
b. Your grandparents give you $500.
c. A cellular network announces a holiday sale on a text-messaging package that includes the purchase of a new phone.
d. A friend tells you how great his new cell phone is and suggests that you get one, too.

Answer 1

Answer:

a. Future expectations.

b. Income.

c. price of a related good

d. consumer preferences.

Explanation:

Remember, there are several factors that affects demand, such as:

• price,
• advertising,
• income,
• consumer preferences etc.

In example:

a. The current demand will decrease because of expectations of an improved model of the preferred phone.

b. The purchasing power to buy a more expensive was increased because the grandparents gave the individual $500.

c. The price of data packages a complementary good decreases, leading to more demand for phones.

d. The referral of a friend influences interest, leading to a purchase of the cell phone.