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Write a report that explains the law of demand and the determinants of demand using the following example and set of scenarios:
A study found that lower airfares led some people to substitute flying for driving to their vacation destinations. This reduced the demand for car travel and led to reduced traffic fatalities, since air travel is safer per passenger mile than car travel. Using the logic suggested by that study, suggest how each of the following events would affect the number of highway fatalities in any one year as well as how each of the following would affect the demand curve for driving to vacation destinations.
Once you have considered the scenarios above, research another good or service that has a substitute. Imagine three different scenarios that could affect the demand curve for that good or service. Follow the same procedure as above, explaining how each scenario would affect the demand for the good or service.
Be sure to define demand and the determinants of demand in your response. Also address the question, how does a movement along the demand curve differ from a shift in the demand curve?
Law Of Demand
Length: 2 pages (550 Words)
Demand refers to the need for a certain commodity within a population. If the need is high, the n it can be stated that the demand for that particular good is high (Jackson, 2013). On the other hand, if less people buy the commodity, it can be said that the demand for that particular product is low. There is a difference between a movement along the demand curve and a shift in the demand curve. Movement along the demand curve occurs when the people’s preference for a certain good has not changed (Jackson, 2013). If the price changes, the quantity of good bought will also change. Therefore, the demand will go up or down. On the other hand, shift in the demand curve occurs when people’s preference for a certain commodity changes. This means that the people will demand for different amounts of the goods at the same price. Additionally, the people may seek alternative goods to satisfy their needs, which were being satisfied by the previous product (Pride, 2010).