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what are the determinants of demand

The main determinants of demand are the factors that cause the entire demand curve for a good or service to shift, not just move along it.

Core determinants of demand

Most introductory economics courses group them into five key non‑price determinants:

  1. Income of consumers
    • When people’s income rises, they usually buy more “normal” goods (better clothes, more restaurant meals).
 * For “inferior” goods (very cheap noodles, second‑hand items), demand can actually fall when income rises because people switch to better alternatives.
  1. Prices of related goods
    • Substitutes : Goods that can replace each other (tea and coffee, Coke and Pepsi). If the price of coffee rises, the demand for tea tends to rise, because people switch to tea.
 * **Complements** : Goods used together (cars and petrol, bread and butter). If the price of petrol rises sharply, the demand for cars that use a lot of fuel may fall.
  1. Tastes and preferences
    • Changes in fashion, lifestyle, health awareness, technology, and advertising can all make a product more or less attractive.
 * A viral trend can suddenly increase demand for a specific shoe or gadget, even if its price and people’s income stay the same.
  1. Expectations about the future
    • If consumers expect prices to rise in the future, they are more likely to buy now, increasing current demand.
 * If they expect prices or their income to **fall** , they may delay purchases, reducing current demand.
  1. Number of buyers (size and structure of the market)
    • More buyers in the market (because of population growth, migration, or new segments like teenagers getting smartphones) means higher market demand at each price.
 * Fewer buyers (ageing population for some products, people moving away) lowers demand.

Some modern summaries also explicitly list advertising/marketing and weather/season as separate determinants, even though they are often folded into tastes or “other factors”:

  • Advertising and information : Strong campaigns, influencers, reviews, and social proof can increase demand by changing perceived value.
  • Season and weather : Demand for ice cream, cold drinks, and air conditioners rises in hot weather; demand for coats and heaters rises in winter.

Price vs determinants: a quick clarification

  • A change in price of the good itself causes a movement along the demand curve (change in quantity demanded).
  • A change in the determinants above (income, tastes, related goods, expectations, number of buyers, etc.) causes the whole demand curve to shift right (more demand) or left (less demand) at every price.

Simple example story

Imagine a new smartphone model:

  • Influencer reviews and ads make it very popular → tastes shift in its favor → demand curve shifts right.
  • A competing phone’s price rises → some consumers switch → demand for the new phone increases further because they are substitutes.
  • If a recession hits and incomes fall, demand for this relatively expensive phone may then drop, shifting demand left, even if its own price does not change.

Mini table: key determinants at a glance

html

<table>
  <thead>
    <tr>
      <th>Determinant</th>
      <th>What changes</th>
      <th>Typical effect on demand</th>
    </tr>
  </thead>
  <tbody>
    <tr>
      <td>Income</td>
      <td>Consumers become richer or poorer [web:3][web:5][web:7]</td>
      <td>Normal goods: demand ↑ with income; inferior goods: demand ↓ with income [web:3][web:7]</td>
    </tr>
    <tr>
      <td>Prices of related goods</td>
      <td>Substitute or complement prices change [web:1][web:3][web:5][web:7]</td>
      <td>Substitute price ↑ → demand for this good ↑; complement price ↑ → demand for this good ↓ [web:1][web:3][web:5][web:7]</td>
    </tr>
    <tr>
      <td>Tastes & preferences</td>
      <td>Trends, habits, information, ads, social media [web:1][web:2][web:3][web:4][web:7]</td>
      <td>More favorable attitude → demand curve shifts right; less favorable → shifts left [web:3][web:7]</td>
    </tr>
    <tr>
      <td>Expectations</td>
      <td>Expectations about future prices or income [web:1][web:3][web:7]</td>
      <td>Expect higher future prices/income → buy more now; expect lower → buy less now [web:1][web:3][web:7]</td>
    </tr>
    <tr>
      <td>Number of buyers</td>
      <td>Market size or composition changes [web:1][web:2][web:3]</td>
      <td>More buyers → higher market demand; fewer buyers → lower demand [web:1][web:3]</td>
    </tr>
    <tr>
      <td>Advertising & information</td>
      <td>Marketing campaigns, reviews, influencer promotion [web:1][web:2][web:4]</td>
      <td>Effective promotion usually increases demand by shifting tastes [web:2][web:4]</td>
    </tr>
    <tr>
      <td>Season & weather</td>
      <td>Climate, time of year (summer/winter, festivals) [web:1][web:3]</td>
      <td>Seasonal products see demand rise in “their” season and fall outside it [web:3]</td>
    </tr>
  </tbody>
</table>

TL;DR: The determinants of demand are mainly income, prices of related goods, tastes and preferences, expectations, and the number of buyers, with advertising and season/weather often added as practical extras.

Information gathered from public forums or data available on the internet and portrayed here.