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Downy Laundry Detergent: Demand and Elasticity 1

1) Demand for laundry detergent is influenced by income levels, tastes and preferences, and expectations of future prices. Income has a significant impact on demand - as income rises, demand for normal goods like detergent also rises. 2) Between 2002-2012, per capita laundry detergent use in the US increased from 33-81 pounds per year while other detergents decreased from 77-57 pounds as tastes changed. 3) Predictions about future prices can impact current demand as people may stock up if a price increase is expected. Income demand elasticity refers to how much demand for a product changes as income changes.

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230 views4 pages

Downy Laundry Detergent: Demand and Elasticity 1

1) Demand for laundry detergent is influenced by income levels, tastes and preferences, and expectations of future prices. Income has a significant impact on demand - as income rises, demand for normal goods like detergent also rises. 2) Between 2002-2012, per capita laundry detergent use in the US increased from 33-81 pounds per year while other detergents decreased from 77-57 pounds as tastes changed. 3) Predictions about future prices can impact current demand as people may stock up if a price increase is expected. Income demand elasticity refers to how much demand for a product changes as income changes.

Uploaded by

Tot
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© © All Rights Reserved
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DEMAND AND ELASTICITY 1

Downy Laundry Detergent

Student’s Name

Instructor

Institutional Affiliation

Course

Date
Demand And Elasticity 2
2

In microeconomics, a number of important variables influence demand. Commodity demand

may rise or fall based on a variety of variables other than price.

Steady source of income

Income levels have a significant impact on consumer demand for products and services. The

more money people have, the higher the demand of detergent products will be. The impact of

income on demand, on the other hand, varies depending on the product. Normal goods are those

for which a rise in revenue leads to a rise in demand and a reduction in demand results in a

decrease in demand for the item concerned. However, if the item in question is a subpar one, a

rise in revenue will lead to a drop in demand, and vice versa (Zhao & Xie, 2016).

Change of Test and Preference

Per capita Laundry detergent in the United States increased from 33 to 81 pounds per year

between2002 and 2012, but per capita of other detergents decreased from 77 to 57 pounds per
Demand And Elasticity 3
2

year, according to the United States Department (Zhao & Xie, 2016). When tastes vary, the

amount requested at every price changes, which means the demand curve moves to the right for

Downy Laundry detergent and to the left other detergents sold by different company.

Expectation of future Prices

Prices obviously have an impact

on demand, but predictions about

future prices (or preferences and

incomes) may also have an effect. People may rush to the shop to purchase the laundry detergent

if they hear that a storm is approaching. People may go to the shop to stock up on soaps today if

they hear that the price will increase in the future. These fluctuations in demand are shown

graphically in the form of a curve. In other words, when any economic element (other than the

present price) changes, a different amount is wanted at every price. The demand will shift to the

right
Demand And Elasticity 4
2

Income Demand Elasticity:

The level of one's income has a significant impact on market for a certain product. When a

consumer's income changes, the amount required of a product changes as well, although other

variables stay the same. Income effect refers to how quickly or how much a consumer's desire

for a product changes as his or her income changes.

References

DEMAND, F. E. O. Transit Fare Elasticity: Role in Fare Policy and Planning. Short-Range

Transit Operations Planning and Development, 862, 29.

Zhao, L., Zhang, J., & Xie, J. (2016). Impact of demand price elasticity on advantages of

cooperative advertising in a two-tier supply chain. International Journal of Production

Research, 54(9), 2541-2551.

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