Determinants of Demand 1. Tastes and preferences – when our preferences increase, demand increases 2. Consumer's income – when income increases, demand for inferior goods decreases while demand for normal goods increases 3. Expectations about future prices
expect future prices to rise = demand goes up = prices go up
expect future prices to fall = demand goes down = prices go down
4. Expectations about future income
expect income to increase = demand goes up
expect income to decrease = demand goes down
5. Price of substitutes and complements
Substitutes – if the price of a substitute goes up, the demand for the other goes up (same direction)
Complements – (opposite direction)
6. Number of buyers – when the population of buyers increase, demand increases
Stephanie Powers, "ECON 100: Determinants of Demand," (lecture, Red Deer College - Donald School of Business, Red Deer, AB, October 6, 2011).
Stephanie Powers, "ECON 101: Determinants of Demand," (lecture, Red Deer College - Donald School of Business, Red Deer, AB, January 23, 2012).
1. Tastes and preferences – when our preferences increase, demand increases
2. Consumer's income – when income increases, demand for inferior goods decreases while demand for normal goods increases
3. Expectations about future prices
- expect future prices to rise = demand goes up = prices go up
- expect future prices to fall = demand goes down = prices go down
4. Expectations about future income- expect income to increase = demand goes up
- expect income to decrease = demand goes down
5. Price of substitutes and complements- Substitutes – if the price of a substitute goes up, the demand for the other goes up (same direction)
- Complements – (opposite direction)
6. Number of buyers – when the population of buyers increase, demand increasesStephanie Powers, "ECON 100: Determinants of Demand," (lecture, Red Deer College - Donald School of Business, Red Deer, AB, October 6, 2011).
Stephanie Powers, "ECON 101: Determinants of Demand," (lecture, Red Deer College - Donald School of Business, Red Deer, AB, January 23, 2012).