CONSUMER AFFAIRS

Factors that Influence the Price of Goods and Services

Presented by Mr. D. Gooden

Different countries govern differently…prices of goods are the same

A market is a place where people (vendors) take their goods and sell it to people. It is a physical

place where people buy and sell eg. May Pen Market

Price Formation of GoodsThe price of goods and services in different countries is dependent of

the type of market that exists.

A market can also be seen as any environmentwhere trading takes place eg. over the internet, at a backyard sale or between two students on the school compound.

Price Formation of Goods

Price Formation of GoodsThe price of goods and services in different countries is also dependent on the demand and supply of the goods

and services.

What is demand?

Demand refers to how much (quantity) of a product or service is

desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain

price.

Price Formation of GoodsThe price of goods and services in different countries is also dependent on the demand and supply of the goods

and services.

What is supply?

represents how much the market can offer. The quantity supplied refers to

the amount of a certain good producers are willing to supply when

receiving a certain price

Some of factors that affect the demand for goods and services

• Changes in consumers’ Income • Changes in the tastes/preferences of consumers

for goods/services

• Changes in the prices of related goods and services: (Substitutes and Complements)

• Natural disasters (storms, hurricanes, earthquakes, tornadoes, floods etc)

Some of factors that affect the demand for goods and services

• Advertising or Commercial ads

• Seasonality (Christmas, Easter, Valentines Day etc)

• Changes in government fiscal policy (spending and taxation) and monetary policy (interest rate etc)

Some of factors that affect the supply for goods and services

• Changes in the Price of a good or service • The Costs of factor inputs of firms (labor, capital

etc) • The # of business firms in an industry • Changes in Technology (or the State of the Art)

of business firms

• Changes in the Prices of related goods and services

Some of factors that affect the supply for goods and services

• Natural Disasters • Government fiscal and monetary policies • The rate of growth of the Population • Scientific Discoveries (medical, inventions,

chemicals etc) • Changes in the Tastes/Preferences of

consumers for goods/services

THE END