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Trends in Consumption Pattern

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  • Category: Economics

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            Economics is defined as the “study of production, distribution and consumption of wealth in human societies” (Economist’s Dictionary of Economy). Economics is also a “social science that studies human behavior” (Purdue University Indianapolis). Economics can be used not only to predict individual behavior, but also the behavior of institutions and groups (Purdue University Indianapolis). Wikipedia citing Robbins (1935) defines Economics as “a social science that studies human nature as a relationship between ends and scarce means which have alternative uses.”

            Mofatt (n.d.) defines Economics as “the study of how individuals and groups make decisions with limited resources as to best satisfy their needs, wants and desires.” 


            Microeconomics is defined as the “study of economics at the level of individual consumers, groups of consumers, or firms” (Economist’s Dictionary of Economy).  It said to deal with “the decision making and market results of consumers and firms” (West Valley College). Moffatt citing Wikipedia (n.d.) defines Microeconomics as the study of the economic behaviour of individual consumers, firms, and industries and the distribution of total production and income among them. It considers individuals both as suppliers of labor and capital and as the ultimate consumers of the final product.”

Law of Supply

            The Law of Supply is the “microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity of goods or services offered by suppliers increases and vice versa.” (Investopedia, n.d.)

            Ehrbar (n.d.) said that the Law of Supply states that “the quantity of a good supplied (that is, the amount that owners or producers offer for sale) rises as the market price rises, and falls as the price falls.” He also said the most economic phenomena are often explained by the interaction of this law with the Law of Demand.

Law of Demand

The Law of Demand is the “microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer demand for the good or service will decrease and vice versa.” (Investopedia, n.d.)

            Ehrbar (n.d.) said that the Law of Demand states that “the quantity of a good demanded falls as the price rises, and vice versa.” As mentioned above, the interaction of this law with the Law of Supply is used to explain or analyze most economic phenomena. The goal of the market is achieve equilibrium or the point in which supply and demand are equal (Ehrbar, n.d.).

Factors that Lead to Change in Supply

            The following are factors that lead to changes in supply: changes in the price of substitute, expected changes in future prices, changes in fashion, changes in consumers preference or taste and changes in population. Other factors affecting supply are seasonal conditions, changes in the cost of factors of production, scarcity or availability of the factors of production, and changes in the cost of producing other goods. As to the last factor, supply may change when resources are channeled towards the production of goods with lower cost rather than on product originally produced, thereby reducing the supply.

Factors that Lead to Change in Demand

            The following are factors that may lead to change in demand: changes in income levels, changes in the price of substitutes, expected changes in future prices, fashion trends, changes in consumer taste or preference and changes in population.


            According to an article of People’s Daily Online entitled ‘China’s Drink Consumption to Increase by 100% in Five Years”, there is an upward trend in the consumption of beverages in China. China will increase its beverage consumption from ten kilograms in 2000 to twenty kilograms in 2005 (China’s drink, 2000, par. 1).  This rapid increase in beverage consumption is planned to be met by an increase in the production of beverage by fourteen percent annually (China’s drink, 2000, par. 1). This upward trend has been going on for some time, as evidenced by the increasing number of choices in the market. From the one kind of carbonated drink that used to be available, there are now several carbonated drinks, bottled water, tea-based drinks as well as fruit juices (China’s drink, 2000, par. 3).

            Bottled drinks have become a necessity, if the current consumption is any indication. Drinking, of course, is necessary for survival. Bottled drinks, on the other hand, has become necessary for surviving the busy modern lifestyle. It is convenient, as well as sanitary. Certainly, as the level of income in China rises, the need to economize takes a back burner and the need for convenience and health takes the forefront. There is also an increasing demand for drinks that are low in sugar and natural – although this remains low in 2000 (China’s drink, 2000, par. 3). However, more and more suppliers are giving these choices to consumers. Certainly, tea-based drinks, bottled water and fruit juices are challenging the supremacy of carbonated drinks.

            Despite the increase in demand, suppliers in China are quite able to meet the demand for both quantity of supply and diversity of choices. In 2000, China’s beverage suppliers are capable of producing twenty tons of beverages annually (China’s drink, 2000, par. 3).

            The change in demand is brought about by the increase in the population’s spending power (China’s drink, 2000, par. 3). It is expected that while the level of income of the population continues to increase, the consumption of bottled beverage will also continue to increase. More than income, the increase in demand is also brought about by changes in lifestyle – although it can be argued that change in lifestyle is brought about by changes in income. As stated above, bottled beverages are convenient, which makes it suited to busy lifestyles.

The growing trend towards non-carbonated drink can be attributed to the new consciousness of the people in China on the importance of health. These can be seen in proliferation tea-based drinks that are often touted as ‘healthy’, juices which are sugar-free and fruit juices that ‘all-natural’.

Although the prices of the bottled beverages are not mentioned or whether a price war is going on, this could be a factor in the growing consumption trend particularly since there are many suppliers. Certainly, there is no scarcity in competition in the beverage industry as shown by many new choices cropping out in the market.


China’s Drink Consumption to Increase by 100% in Five Years. 5 September 2000. People’s Daily On-line. Retrieved 3 March 2008 at http://english.peopledaily.com.cn/english/200009/05/eng20000905_49754.html

Moffatt, Mike. n.d. What is Economics? Retrieved 3 March 2008 at http://economics.about.com/cs/studentresources/f/whatiseconomics.htm

Moffatt, Mike. n.d. What is Economics? Retrieved 3 March 2008 at http://economics.about.com/cs/studentresources/f/microeconomics.htm

Ehrbar, Al. n.d. Supply. Retrieved 3 March 2008 at http://www.econlib.org/Library/Enc/Supply.html.

Law of Supply. n.d. Retrieved 3 March 2008 at http://www.investopedia.com/terms/l/lawofsupply.asp

Law of Demand. n.d. Retrieved 3 March 2008 at http://www.investopedia.com/terms/l/lawofdemand.asp.

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