Determinants of Demand

Market Economy

relies on the law of supply vs. demand

Determinants of Demand

factors that influence the quantity of a good or service that consumers are willing and able to buy at various prices and over a given period

Determinants of Demand

plays a crucial role in shaping the demand curve for a particular product

Determinants of Demand in a Market Economy

Price of good or service
Numbers of consumers in the marketplace
Income of consumers
Price of related goods and services
Consumer tastes, preferences, and expectations

Price of Good or Service

the most direct factor influencing demand

Price of Good or Service

as the price decreases, consumers are typically willing to buy more, and as the price increases, they tend to buy less

Number of Consumers

a larger population or an increase in the number of potential buyers usually leads to an increase in overall demand for goods and services

Income of Consumers

as income rises, the demand for goods tends to be affected

Price of Related Goods and Services

the prices of substitutes and complements impact demand

Substitute Goods

if the price of the good rises, consumers may shift to the other

Complement Goods

if the price of one complement falls, the demand for the other may rise

Consumer Tastes, Preferences, and Expectations

influenced by various factors such as advertising, trends, and cultural shifts

Consumer Tastes, Preferences, and Expectations

if a product becomes more fashionable or desirable, its demand may increase

Consumer Tastes, Preferences, and Expectations

if consumer expectations about future prices or changes in income can influence current demand