Factors Affecting Demand

• Price

  • Consumers must decide whether they are willing to pay the nominated price for a given item
  • Current consumption is affected by expected future prices
• Income

  • When income levels change, so will consumer demand
  • Rising incomes tend to increase demand for luxury goods
• Population


  Population size will affect the total quantity demand, the age distribution determines the types of goods or services demanded.
• Preferences


  When consumer preferences change over time so will quantity demanded
• Prices of Substitutes


  If the price of a product rises, the demand for a substitute will increase
• Prices of Complements

  If the price of one good increases, one would expect a decline in the quantity of that good demanded, and a decrease in demand for its complement good.