Demand Determinants

Demand determinants are factors that will shift the demand curve.   At every price, buyers will demand more or less of the item in question.

Buyer’s Income 

Normal Goods: When a rise in income increases the demand for a good – the normal case – we say that the
good is a normal good.

Inferior Goods: When a rise in income decreases the demand for a good, it is an inferior good.

Buyer’s Preferences/Consumer’s Taste

 A change in consumers tastes and preferences also affects demand. Eg. Nutrition, fashion, safety.

Buyer’s Expectations

 Expectation of future price changes will alter current demand (e.g. gas price increase in the immediate future will cause consumer to fill their tanks earlier)

Other prices

Price of a complementary good – Two goods are complements if a fall in the price of one good makes people
more willing to buy the other good.

 Price of a substitute good – Two goods are substitutes if a fall in the price of one of the goods makes
consumers less willing to buy the other good

Number of buyers

An increase in the number of buyers will increase the demand for a product.  A decrease in the number of buyers will decrease the demand for a product.

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