Demand Factors
It is important that you are able to distinguish between macroeconomic demand side factors (changes that affect the overall level of demand in the economy) and microeconomic demand side factors (changes that affect demand in just one sector of the economy). Each of the following factors can be classified as a microeconomic demand side factor, but only when you take the time to make the link between the change listed below and at least one relevant market.
| Factors which may lead to an increase in demand |
- A fall in the cash rate as set by the Reserve Bank of Australia
- An increase in wages paid to Australian workers
- A fall in the price of a complementary product
- An increase in the price of a substitute product
- An improvement in the rate of confidence by either businesses or consumers
- An increase in the number of people who are in the market to purchase the product (ie the population in the market)
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| Factors which may lead to a decrease in demand |
- An increase in the cash rate
- A decrease in the wages paid to Australian workers (or an increase in tax rates)
- An increase in the price of a complementary product
- A decrease in the price of a substitute product
- An improvement in the economic sentiment of either businesses or consumers
- A fall in the number of people who are in the market to purchase the product (ie the population in the market)
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Unit 1
Unit 3