Author Question: List all the influences on buying plans that change demand, and for each influence, say whether it ... (Read 79 times)

MGLQZ · **on:** Jun 29, 2018

List all the influences on buying plans that change demand, and for each influence, say whether it increases or decreases demand.

What will be an ideal response?

Question 2

Explain the condition where society would be better off when more of a good is produced.

What will be an ideal response?

shayla · **Reply #1 on:** Jun 29, 2018

Answer to Question 1

Influences that change the demand for a good include:
The prices of related goods. A rise (fall) in the price of a substitute increases (decreases) the demand for the first good. A rise (fall) in the price of a complement decreases (increases) the demand for the first good.
The expected future price of the good. A rise (fall) in the expected future price of a good increases (decreases) the demand in the current period.
Income. An increase (decrease) in income increases (decreases) the demand for a normal good. An increase in income decreases (increases) the demand for an inferior good.
Expected future income and credit. An increase (decrease) in expected future income or credit increases (decreases) the demand.
The population. An increase (decrease) in population increases (decreases) the demand.
People's preferences. If people's preferences for a good rise (fall), the demand increases (decreases).

Answer to Question 2

When the price of a good is greater than the marginal cost to produce that good, society will be better off if more of that good is produced.