ECO-Demand, page no 45-46
determinants can cause the demand curve for a good or service to shift to the left or right, which would indicate an increase or decrease in demand. The five main determinants of demand are income, price, tastes and preferences, prices of related goods and services, and consumer expectations.
Income: Income is the money you receive in exchange for your labour or products. Income may have different definitions depending on the context. Ex: The average person in the USA will have a higher level of demand for goods and services than the average person in Vietnam or Turkey.
Price: the amount of money that a buyer gives to a seller in exchange for a good or a service. Ex: if a customer is planning a vacation and the price of airline tickets is too high, they may choose to delay their trip or look for alternative ways to get to their destination.
Tastes and preferences: the individual's subjective likes and dislikes when it comes to consuming goods and services. Ex: the individual's subjective likes and dislikes when it comes to consuming goods and services.
Prices of related goods and services: the lower the price the greater the quantity demanded for normal goods and the higher the price, the lower the quantity demanded for normal goods along the same demand curve. Ex: An increase in the rate of bread will decrease the demand for butter.
consumer Expectations: Expectations of a higher income or expecting an increase in prices of goods will lead to an increase the quantity demanded. Similarly, expectations of a reduced income or a lowering in prices of goods will decrease the quantity demanded. Ex: If people expect gasoline prices to rise tomorrow, they will fill up their tanks today to try to beat the price increase.
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Another version and a few added points from Chat GPT
The determinants of demand are factors that influence how much of a product or service consumers are willing and able to buy at various prices and over a given period. These determinants include:
Price of the Product: The most direct determinant is the price of the good or service itself. As the price changes, typically demand changes in the opposite direction, adhering to the law of demand.
Income: The income level of consumers affects their purchasing power. As income increases, consumers can afford to buy more goods and services at each price level, leading to an increase in demand for normal goods. For inferior goods, demand may decrease as income rises.
Prices of Related Goods:
Substitute Goods: Goods that can be used in place of each other (e.g., tea and coffee). An increase in the price of one substitute can lead to an increase in demand for the other.
Complementary Goods: Goods that are consumed together (e.g., printers and printer ink). An increase in the price of one complementary good can decrease demand for the other.
Consumer Preferences and Tastes: Changes in consumer preferences, influenced by factors like fashion trends, advertising, health considerations, etc., can significantly impact demand.
Expectations: Consumer expectations about future prices, income levels, or other economic conditions can affect current demand. For example, if consumers expect prices to rise in the future, they may increase current demand to avoid higher costs later.
Population and Demographics: The size and composition of the population (e.g., age distribution, gender, income levels) can affect demand patterns. Changes in demographics can lead to shifts in demand for certain goods and services.
Consumer Confidence: The overall economic outlook and consumer confidence levels can influence spending behavior. Higher confidence may lead to increased demand, while lower confidence can lead to decreased demand.
These determinants collectively shape the demand curve for a product or service, illustrating how consumer behavior responds to various economic and social factors.