Econ non price determinants

• Demand #1

  Income:

  Normal goods: As income rises, the demand for the product will also rise, shifting to the left.

  Inferior goods: If a product is "inferior", then demand for the product will fall as income rises.
• Demand #2

  The price of related goods:

  Substitutes: If products are substitutes for each other, then a change in the price of one of the products will lead to a change in demand for the other. Ex: If there is a decrease in the price of chicken, less beef will be demanded, and chicken will be in higher demand.

  Complements: If products complement each other, then they will be purchased together. Example: If the price of a console lowers, the demand for video games will also rise due to them "going together".
• Demand #3

  Tastes and preferences:

  If tastes change for flavors, the market will shift that way.
• Demand #4

  Future price expectations:

  If consumers think the price of a product will increase in the future then they might demand more of that product in the present. If consumers think that the price will decrease, they're likely to stop buying the product in the present. Ex: Black friday.
• Demand #5

  Number of consumers:

  If there is an increase in the number of consumers of a product, then there will be a shift of the demand curve to the right. This often relates to the size of the population and demographic changes in a country. If a country's population is growing, then the demand for most products will increase and their demand curves will shift to the right.
• Supply #1

  The cost of factors of production:

  If there is an increase in the cost of a factor of production, such as a wage increase in a firm producing textiles, which is labor-intensive, then this will increase the firm's costs. This means they can supply less, shifting the supply curve to the left. This is shown in Figure 5.2.
• Supply #2

  The price of related goods:

  COMPETITIVE SUPPLY: Competitive supply - Often, producers have a choice as to what they are going to produce because the factors of production that they control are capable of producing more than one product. For example, a producer of roller skates may also be able to produce skateboards with minimal change in production facilities. In this case, if the price of skateboards rises, because there si more demand for them, then it may well be that the producer will be attracted by the higher prices and aim to supply more skateboards and fewer roller skates.

  JOINT SUPPLY: Sometimes, two goods are produced simultaneously, if this happens, then the goods are said to be in joint supply. You might hear the term "by-product" where products that are in joint supply are concerned. For example, when sugar is refined, molasses (a kind of black treacle) is created. Molasses is a by-product of sugar and the two products are in joint supply.
• Supply #3

  Government Intervention:

  In many ways, governments intervene with the supply market, think indirect taxes and subsidies. Indirect taxes are taxes on goods and services that are added to the price of a product.
• Supply #4

  Expectations about future prices:

  Producers make decisions about what to supply based on their expectations of future prices. However, the effect that expectations might have on production decisions might vary. Producers who expect the demand for their product to rise in the future may assume that the higher demand will lead to a higher price. If it is possible to store the product they might then withhold the product from the market in order to be ready to be able to supply more ni the future, to gain from the higher price.

  Alternatively, supply might be increased to be able to meet the demand at higher prices. Similarly, if market research suggests that demand for a product will fall in the future, then producers will be likely to reduce their supply of the product. Producers' expectations and confidence in the future may exert a strong effect on their production decisions.
• Supply #5

  Changes in technology:

  Improvements in the state of technology in a firm will lead to a shift of the supply curve to the right. Although rare, if technology were to move backwards, then supply would shift to the left.
• Supply #6

  Weather or natural disasters:

  In delicate markets like agriculture, weather has a toll on supply. Natural disasters can destroy firms and decrease supply significantly.