Question

DESCRIBE FOUR MAJOR FACTORS, OTHER THAN PRICE , LIKELY TO INFLUENCE DEMAND FOR A RESORT HOTEL IN ACAPULCO

Answer 1

Demand for a commodity refers to the desire to buy a commodity backed with sufficient purchasing power and the willingness to spend. When demand of a commodity changes due to change in factors other than price than it is known as change in demand and it leads to shift of demand curve either rightward or leftward. Determinants of demand for a Resort Hotel in ACAPULCO:

1. Price of related goods: Demand for a commodity is also affected by the change in the price of related goods like substitute goods or complementary goods. Substitute goods are those goods which are used in place of one another. Increase in the price of one good increases the demand of other good and vice-versa. On the other hand, complementary goods are those goods which jointly satisfy a particular want of consumer. An increase in the price of one good decreases the demand of other good. It causes shift of demand curve either rightward or leftwards.

2. Income of the consumer: Increase in the income of consumer increases the demand of Resort Hotel. It causes rightward shift of demand curve.

3. Taste and Preference of the consumer: If consumers have favorable taste and preference for the beaches then demand of Resort Hotel increases and vice-versa. This shifts demand curve rightwards.

4. Expectation: If people expect that price of resort hotel in Acapulco will increase in near future then people demand more today and as a result, demand increases and shifts demand curve rightwards and vice-versa.