Application Exercise 3c: Changes in demand
Building materials | Increase | Because homes need to be built for the increased number of households |
Child care services | Increase | Because parents will be able to afford to use child care more often |
Apples | Decrease | Because the price of a substitute has decreased |
Butter | Decrease | Because the price of a substitute has decreased |
Luxury cars | Increase | Because household wealth increases and consumers can afford more luxury goods |
Home extensions | Decrease | Given that most people borrow to undertake extensions, the higher cost of borrowing deters consumers from extending their homes |
Motor vehicles | Decrease | Because consumers are less confident about the future and are therefore likely to spend less and save more |
Electric cars | Decrease | Because the cost of owning/running a substiture for electric cars (i.e. petrol cars) is lower which increases the demand for petrol powered cars |
Postal services | Increase | Because online transactions will usually involve the delivery of parcels |
Coffee | Decrease | Because the price of a complement for coffee has risen, the overall cost of consuming coffee will increase |
Cigarettes | Decrease | Because consumers are less likely to be enticed by colourful packaging |
Solar panels | Decrease | Because the effective or final cost of installing solar panels will rise |
Bottled water | Increase | Because the price of a substitute (soft drinks) will rise |
Uber ride sharing | Decrease | Because the availability of a substitute has increased |
Guns | Decrease | Because the purchase of a greater range of guns is likely to be made illegal to possess |
Gas | Increase | Because households/businesses will need energy (including gas) to heat homes/buildings |
Hand sanitiser | Increase | Because people want the sanitiser to minimise the risk of either getting/transmitting Covid |
Petrol | Decrease | Because the demand for a complement will fall (ie the demand for cars will decrease) |
Education exports | Decrease | Because foreign students are not allowed to enter the country |
Face masks | Decrease | Because the risk of transmitting the disease falls |