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6 Cards in this Set
- Front
- Back
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What are the factors? |
Level of income Price of product Price of substitute and complimentary products Consumer tastes and preferences Advertising |
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How does the level of income influence expenditure choices? |
Higher income means more and higher quality goods and services. |
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How does the price of a product influence expenditure choices? |
Necessities are bought regardless of the price because demand will never decrease. Demand decreases for luxury items if their prices increase. |
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How does the prices of substitute and complimentary goods influence expenditure choices? |
If the price of an item increases, then the demand for its substitute will also increase. The prices of complimentary products effect the prices and demands of the actual product. |
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How do consumer tastes and preferences influence expenditure choices? |
The change in tastes and preferences over time changes the demand for products. |
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What are some sources of income? |
Wages Social welfare, which aims to provide a safety net of minimum income to ensure all consumers are able to afford basic necessities. Transfer payments, collected by the government through tax and transferred to consumers. |
