Determinants of Demand

1) Income
- A raise increased my ability to consume
- A paycut decreases my ability to consume

2) Preferences/Taste
- Decrease in demand for steak as BBQ season passes
- Increase in demand for a book Oprah featured on her show

3) Prices of substitutes or complements
- Substitute: price of coke goes up, I buy pepsi as a substitute (demand of coke down, demand of pepsi up)
- Compliment: price of green fees goes up, I don't golf as much. Demand down, I also don't need as many golf balls now, demand down

4) Number of consumers/buyers
- Demand of everything from cars to food increases as population increases

5) Expectations about the future - income and prices
- Demand goes up as I expect my favorite drink to go up in price, so I stock up now

6) Quality - of good or service (1)
- Demand for Dominos Pizza increases as they advertise for an increase in the quality of their product [1]

1. Stephanie Powers, Circular Flow _ Determinants of Demand, Red Deer, 2012.

Demand: the quantities that consumers are willing and able to buy per period of time at various prices
Quantity demanded: the amount that people are willing and able to buy at one specific price
*A CHANGE IN PRICE CHANGES QUANTITY DEMANDED, NOT DEMAND* [2]
  1. ^ (Examples) Sayre and Morris, Principles of Macroeconomics 6th Edition (2009), Chapter 2
  2. ^ Circular Flow Lesson Notes ECON 101, Lecture, Red Deer College, Red Deer, AB, February 2012