8 Take two determinants of demand two determinants of supply

8. Take two determinants of demand, two determinants of supply and two determinants of the elasticity of demand. Explain each one of thenm provide a real world example of each one, and explain what has to happen top each one of them for them to increase (use real world examples, do not use examples from the book or from class) (10)

Solution

8. The demand for a good is a function of its own price, income, price of related goods, tastes, expectations etc. Numerically Dx = f(Px, Pr, I, T, E) .

Determinants of demand

If the two goods are substitutes then an increase in the price of one good will increase the demand for other goods for example coffee and tea.

The supply for a good depends on its own price, price of inputs, technology and expectation about future prices and number of sellers. Mathematically Supply = f(Po, Pi, T, EX, N)

Determinants of supply

Determinants of elasticity of demand are

* for solution to other question please post as aseparate question.