ECO2013 chapter 3

Determinates of Demand: Tastes/Preferences

Preference for a certain product over others

Determinates of Demand: Number of consumers  

Shifts the demand for goods or services

Determinates of Demand: Price of related Goods

Substitutes: consumers can substitute one for another depending on their respective price.

Complements: Goods that are typically consumed together

Determinates of Demand: Income

Generally speaking, as income rises, demand for most goods will likewise increase.

Normal goods: As income rises, the goods demand rises.

Inferior goods: as income rises the demand decreases.

Determinates of Demand: Expectations

If you believe that the price of an item will increase in the future then demand decreases, and vice versa.

Determinates of Supply: Price of resources

Change in the price of inputs, if it rises then supply will decrease

Determinates of Supply: Number of Producers

An increase in producers means an increase in supply

Determinates of Supply: Technology

New advancement in technology would allow for an increase in supply

Determinates of Supply: Taxes & Subsidies

Taxes goes to limit the money for a producer, decreasing the amount  of supply thy can produce.

Subsidies is money given by the government and helps to increases supply.

Determinates of Supply: Expectations

If prices are expected to rise in the future producers hold back supply for in anticipation for the higher prices.