ECONOMICS GROUP PRESENTATION

Group 1 Questions
Question 1. With reference to a commodity of your choice, outline its determinants of demand.

NAME REGISTRATION NO.

1. CONLEY KWENDA R121944X
2. PRINCE TAVAZIVA R1814475F
3. ETHELDREDA CHIKOPA R191384A
4. SHEILA SAMAKOMVA R1813803C
5. TELMORE TINASHE MATEKA R191051Z
6. PATIENCE CHIDEU R1815754X
7. ETHEL HELGA MVULA R1815000W
8. TATENDA NJANIKE R181442RB
9. NYASHA TAKAVARASHA R191292W
10 SHINGAI MOILLER MAGUREYI R191202F
.
11 MALVEN MUSIMWA R1815272F
.
12 ANNAMARY CHIKWIRAMAKOMO R1815157X
.
13 MITCHELL MANYANGA R193878Z
.
14 WINNET AGNES MODZERE R169708Q
.
15 KENNEDY GEORGE TABAZIBA R1813791R
.
16 ISAAC MUDYANHORA R183039Y
.
17
.
DETERMINANTS FOR DEMAND FOR BREAD AS THE COMMODITY CHOSEN.
The commodity of choice is bread

Introduction: Economic theory holds that demand consists of two factors which are taste and ability to buy. Taste,
which is the desire for a good, determines the willingness to buy the good at a specific price. Ability to buy means that
to buy a good at specific price, an individual must possess sufficient wealth or income. There are several determinants
Q1
that affect the increase or decrease in the demand of a commodity.

Definition: Demand is the amount of a good that consumers are willing and able to buy at a given price. Willingness
refers to people’s desire to own a good
Determinants: A factor that affects either increase or decrease demand of a commodity

1. OWN PRICE as a determinant: (has an inverse / negative relationship)

Effect of increase of own price on the demand for tea

P1

Po

Q1 Q0

a.) An increase in the price of bread (from Po to P1) will result in decrease in demand from bread (from Qo to Q1) as
illustrated above. This is shown by an upward movement along the demand curve, also known as contraction.
Of all determinants of demand own price is the only determinant that causes a shift on the demand curve.

b.) A decrease in the price of Bread (from P1 to P0) will result in an increase in demand for Bread (from Q1 to Q0)
as illustrated above. This is shown by a downward movement along the demand curve. Also known as expansion.

2. INCOME as a determinant:
Since the income of a consumer affects one’s purchasing power, it therefore also influences the demand for a
product. The effect of an increase in income on the demand of a product depends on whether the product is a
normal or inferior good. An increase in the income of a normal good would automatically increase the
 demand for product by him/her, while other factors are at constant, and vice versa. The opposite is true for an
inferior good whose demand falls with an increase in the level of income earned as people tend to abandon the
good. Since bread is considered as an inferior good, its consumption decreases with a rise in income, ceteris
paribus. An increase in income will therefore shift the demand curve for bread inwards from D to D1
signifying a decrease in demand as illustrated below

Effect of increase in income on demand for bread

(Normal goods)

Q0 Q1

Decrease in income Bread

Effect of the price of biscuits on the demand for Bread

Q1 Q0

a.) At the same price of P a decrease in

income will result in a decrease in
quantity demanded (from Qo to Q1) as
1. PRICE OF SUBSTITUTES as a determinant: shown by the inward / leftward shift of
the demand curve (from D to D1)
 A.) An increase in the price of biscuits which is a substitute for bread, will result in an increase in the demand
for bread.. If bread and biscuits are substitutes, an increase in the price of bread will result in a leftward
movement along the demand curve of bread and cause the demand curve for biscuits to shift out.

B.) Taste and preferences: the tastes and preferences of consumers are affected due to various factors, such as
life styles, customs, common habits, and change in fashion, standard of living, religious values, age, and
sex. A change in any of these factors leads to change in the tastes and preferences of consumers. For
example in Zimbabwe there are two popular bread brands that is Lobels and Bakers Inn if more
consumers prefer Lobels bread in place of Bakers Inn, the demand for Lobels bread increases and demand
for Bakers Inn decreases. However; if more consumers prefer Bakers Inn in place of Lobels it means
demand for Bakers Inn bread increases and demand for Lobels bread decreases.

Tastes and preferences on the demand for Bread

C.)
D.)
E.)
F.)
G.)
H.)
I.)
J.)
K.)
L.)
M.)
N.)
O.)
P.)
Q.)
R.)

Expectations. When people expect the future price of bread to increase, the demand for bread will increase. For
example in Zimbabwe in late 2018 when Grain Millers Association announced shortage of wheat the consumers
anticipated a price increase in bread which resulted in increased demand for bread.
Prices of complementary goods. The price of complementary goods or services raises the cost of using the product
you demand, so you'll want less. For example when the price of butter increases the demand for bread decreases.

Population. The population size affects overall, or “aggregate,” demand. As population increases, demand increases.
That's true even if prices don't change.