People change their minds about what to consume. This affects the demand for goods, which then leads to businesses having to adjust their levels of output to meet the demand for consumers wants.
Demand for products and services change mostly due to personal preferences, however, other changes are brought about by broad economic and social trends, which involve most if not all parts of the society. .
Population change affects the demand a lot. The total population is increasing slowly, however, major changes in the age structure and regional distribution of the population are continuously taking place. Culture, taste and lifestyle are all directly affected by education, which has expanded rapidly especially for women and some minority groups. This also affects demand. Social change also affects demand. By this, I mean that family life changes, and careers which affect the daily lives of people. Tastes and fashions, which change quite a lot, affect the demand for goods as well as the desire of the public to be up to date with fashion. Rising or falling incomes can have a big impact on the pattern of demand. If incomes increase or decrease, the demand of a good changes accordingly depending on the type of good; inferior or normal. Finally, new products and new technological advances affect the demand too. New products attract customers over existing products and new technology means that a business can produce better for less causing some products to fall in demand and others to rise. .
Here is a normal demand and supply diagram where the price is at equilibrium:.
.
If the demand for a product increases, the demand curve shifts to the right:.
.
If the demand for a product decreases, the demand curve would shift to the left:.
.
Due to the levels of output being adjusted, there are changes in the structure of production, also known as structural change. This means that businesses must cut back production of the items people want less of, and expand output of the items for which demand is increasing.
