Determinants of Demand

Determinants of demand are different variables that would change or effect the demand curve. There are five main determinants of demand:

Taste and Preferences: When consumer's tastes and preferences change, the demand curve will shift in accordance to that change. For example, if bikes suddenly became super unpopular all over the world, the demand for bikes would drop sharply, moving the demand curve in to the left.

Number of Buyers: The more buyers a certain product has a large impact on the demand curve. The more buyers in a market, the more chance for their product to be bought and to be in higher demand.

Incomes: The more money poeple have to buy goods, the higher the demand will be, and buy larger quantities of a commodity.
- Normal Goods: Normal goods are products that one would buy in larger amounts if one had more money. The majority of products for sale are normal goods.
- Inferior Goods: Inferior goods are products that if you had more money, you would use the extra cash NOT to buy, and could avoid buying. For example, generic brands, spam ect.

Price of Related Goods: Helps create competition in the market, mostly effected by substitute goods, complementary goods and unrelated goods.
- Substitue Goods: are goods that can be used in place of one another, an example of substitute goods are butter and margarin. The price of one substitute good affects the demand of another, if the price goes up on one, the demand for that product will decrease while the demand for the substitute good goes up. Substitute goods weigh heavily on the elsasticity of demand.
- Complements: Goods that go with another good. Examples include peanut butter and jelly, cars and gas ect. If the price of a complementary good goes up, the demand of the original goes down.

Expectations: If you expect a demand is goeing to be scare, demand will go up.
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