Question

ECONOMICS: Explain the nature of the law of demand by discussing individual demand and the four variables which alter it.

Answer 1

Answer: The four variables which alter it are:

1. The price of the good in question: the more expensive a product is, the lower its demand will normally be.
2. The price of related goods:

• Complementary: they are goods that are consumed together, it is not possible to consume one without also consuming the other.

• Substitutes: those whose consumption is exclusive to each other, to consume one implies not to consume the other, since both satisfy the same need.

   3. The disposable income.

   4. Consumer preferences: tastes, preferences and fashion determine the behavior of the applicants regardless of prices or income.

Explanation:

Demand is the quantity of a good or service that the applicants are determined to acquire at a certain price and conditioned by a series of factors.

Individual demand is defined as the quantity and quality of goods and services that can be acquired by a consumer.