1 / 10

Determinants of Demand

Determinants of Demand. Non price factors that can change (increase or decrease) an entire demand curve for a good or service. Taste. You demand products that you like. Ex. Type of music, clothing, or gas (b/c now you have a car). Income . How much money you make influences your demand

yoland
Download Presentation

Determinants of Demand

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Determinants of Demand Non price factors that can change (increase or decrease) an entire demand curve for a good or service.

  2. Taste • You demand products that you like. • Ex. Type of music, clothing, or gas (b/c now you have a car)

  3. Income • How much money you make influences your demand • Ex. If you win the lottery, your demand for all products will increase • Mo money = mo demand • No money– decrease in demand

  4. Consumer expectations • What we foresee or expect to happen in our near future influences our demand • Ex. If you expect to get a bonus from work, demand increases • If you expect to lose your job, demand will probably will decrease

  5. Market Size • Market size is how many consumers buy the product • Ex. MS goes up = Demand goes up • MS goes down = demand goes down • Ex. New coke • Advertisements, government can influence MS

  6. Price of Related goods • 2 kinds • Complimentary goods = go together, the demand is linked • Ex. Shampoo and conditioner = if you buy one, you usually buy the other. So if the demand for one increases it will increase the demand for the other • Substitute goods = replacements • Kroger vs. Mayfield

  7. Demand curve can change when the determinants change demand! • increase = right

  8. Decrease = left

  9. All 5 Determinants • Taste • Income • Expectations • Market size • Price of related goods (comps and subs)

  10. Law of Demand • Substitution Effect • Replace higher priced goods for lower priced goods • Ex. Mayfield Ice cream for Kroger Ice Cream • Income Effect • When your purchasing power increases or decreases due to a change in a product’s price, the demand will increase or decrease • Ex. Old Navy • Law of Diminishing Marginal Utility • With each additional unit consumed, demand (utility) decreases with each unit. Ex. Tacos

More Related