Determinants of demand
Also called: Factors affecting demand · Topic: Consumer Behaviour, Demand and Elasticity · NCERT: Class 9, Ch 9 "The Price Puzzle: What Drives the Market"; Class 12, Ch 2 "Theory of Consumer Behaviour"; Class 12, Ch 5 "Market Equilibrium"
Meaning
Determinants of demand are the factors that decide how much of a good people want to buy. Apart from the good's own price, they are:
- prices of related goods (substitutes and complements);
- consumer income;
- tastes and preferences;
- population size and composition, including the number of buyers;
- seasonality;
- future price expectations.
A change in own price causes a movement along the demand curve. A change in any other determinant shifts the whole curve.
Example
Tea demand shifts right if coffee becomes costlier (a substitute). It shifts left if sugar becomes costlier (a complement). Ice-cream demand shifts right in summer, and woollens sell more in winter.
Don't confuse with
- Determinants of supply: these include input costs, technology and taxes, and they shift the supply curve instead.
- Own price: a determinant of quantity demanded, but changing it only moves you along the same curve.
Related concepts
- Related goods
- Substitute goods
- Complementary goods
- Consumer income
- Purchasing power
- Future price expectations
- Population size and composition
- Shift in demand curve
- Movement along the demand curve