ECO 605 Discussion 1.1: Factors of Demand

ECO 605 Discussion 1.1: Factors of Demand

ECO 605 Discussion 1.1: Factors of Demand

Demand is the willingness and ability for a person to pay for products and/or services at various prices (Hicks, 2021). Quantity demand is the amount of a service or product that a person or organization is able to purchase at an agreed upon rate during a period of time (Hicks, 2021). Demand primarily focuses on how there are different prices for a similar product/service where quantity demanded focuses on a set price for a period of time. A demand example could be baseball game tickets. If the ticket price decreases from $25 to $20, the demand would increase. Once consumers are satisfied or tired of attending baseball games, then demand will begin to decrease. A great quantity demanded example would be paying rent. One pays $1000 for the rent each month. This is a set price for the space being rented.

Factors that will affect the demand for a product can be separated into four broad categories: Amount of income, the price of similar products or services and the competition, preferences, and expectations (Hicks, 2021).

As people’s incomes increase, while the price of a routine physical examination at a provider’s office stays the same, the quantity demanded for routine physical examinations will increase. The demand curve would then shift to the right showing an increase in demand for the routine physical examinations. An example for the price of similar products and services is how the price of laser eye corrective surgery is decreasing, resulting in an increased demand for the surgery. This leads to a decreased demand for glasses and contacts, the surgery’s substitute. A personal preference example could be how a person may have a preference towards a specific drug because of how the drug was advertised compared to the competition. Expectations can affect the attitude of an individual and when they believe they need a product or service. If a consumer needs a root canal dental surgery and expects the price of a root canal surgery to increase, the consumer may want to have the surgery completed sooner rather than later to save money.

Reference

Hicks, L. L. (2021). Economics of Health and Medical Care. Jones & Bartlett Learning.

According to “Economics of Health and Medical Care,” demand is consumer willingness and ability to purchase quantities of services at various specified prices… with all other causal factors held constant (Hicks, 2021). On the other hand, quantity demanded is consumer willingness and ability to purchase quantities of service at one, specific, price (Hicks, 2021). To differentiate the two terms, demand focuses on many different prices of goods/services ranging from $0-50, whereas, quantity demanded would focus on goods/services that would cost $15.

There are many factors that could change demand in a product. One factor is income. Income has a relationship that is positively related to demand for normal goods/services. For example, if income increases, the quantity demanded would increase as well, unless those goods/services are inferior, which would decrease the quantity demanded. The next factor is the price of related goods. There are two types of goods/services: complements and substitutes. If there is a decrease in the price of one complement, then there will be a decrease in the demand of that complement. On the other hand, if there is a decrease in the price of one substitute, there will be an increase in the demand for that substitute. The next factor is tastes and preferences. Tastes differ from income and price because it is more of a feeling toward a good/service. Tastes/preferences can differ in different age groups, cultures, levels of education, and etc. Lastly, expectations are a factor that can change demand in a product. Expectations about future prices are directly related to present demand. For example, If it is expected that prices go up for medical supplies in the future, there will be an increase in present-day demand for those supplies. Whereas, if it is expected for prices to drop for medical supplies for the future, there will be a decrease in demand for present-day medical supplies.

Since Coronavirus is a big topic in the medical field, let’s say that there is a medical treatment for coronavirus. It could be a pharmaceutical drug that you take every day for a course of 5 days that would decrease the severity and length of symptoms so you can return to work, and life, in general, sooner than the usual “10-day” quarantine. How would the factors mentioned affect the demand in this treatment? First, in regards to income, when income increases, the demand for this Coronavirus treatment would also increase because it is considered a “normal ” good/service. Next, the price of the treatment