- Slides: 9
Demand Determinants of Demand Review S
Determinants of Demand S Income S Weather S Tastes and Preferences S Number of Buyers S Price of Substitute Goods S Expectations S Price of Complementary Goods
Income S If income increases, the demand for cars increases. (normal good) S If income increases, the demand for store brand/generic cereal decreases. (inferior good)
Tastes & Preferences S Bell bottoms are out of style, so the demand for bell bottoms will decrease. S A popular celebrity is seen wearing Converse shoes, so the demand for Converse shoes will increase.
PRICE of Substitute Goods S The price of turkey has increased, so the demand for ham will increase. S Butter is on sale, so the demand for margarine will decrease.
PRICE of Complementary Goods S The price of bagels has increased, so the demand of cream cheese will decrease. S The price of hot dogs has decreased, so the demand for hot dog buns will increase.
Weather S When it’s the rainy season, the demand for rain boots will increase. S In the summer, the demand for winter coats decreases.
Number of Buyers: **POPULATION** S New families move into Paulding County, so the demand for food at Paulding County grocery stores will increase. S People move out of Dallas, so the demand for products at Wal-Mart in Dallas will decrease.
Expectations S TVs are expected to go up in price IN TWO MONTHS, so the demand for TVs increases RIGHT NOW. S Sally thinks she is getting a raise next month, so her demand for new clothing increases. S Studies show that soda is harmful to your health, so the demand for soda will decrease.