Factors of Demand Flashcards

Study Notes

The six key factors influencing demand are: Income, Market Size, Consumer Taste, Consumer Expectations, Substitutes, and Complements.

Demand increases or decreases as the number of consumers in a market expands or contracts.
A larger market size typically leads to increased overall demand.

Anticipations about future prices and availability impact consumers’ current purchasing decisions.
Positive expectations can encourage spending, while negative ones can hinder it.

Substitutes are products that can replace one another.
A decrease in the price of substitutes can lead to a decline in demand for the original product.

A decrease in income leads to reliance on inferior goods, decreasing demand for normal goods.
Shrinking market size results in varying demand based on fewer consumers.
Changes in consumer taste can negatively impact the demand for specific products.
Negative consumer expectations can result in product underperformance and reduced demand.
Lower priced substitutes draw consumers away from more expensive options.
Rising prices of one product can diminish demand for its complementary goods.

Increased consumer income typically enhances demand for various products.
An expanding market size results in higher demand due to more potential buyers.
Positive consumer desire boosts demand for products that align with their preferences.
Favorable expectations encourage consumers to purchase products perceived as high quality.
Rising prices of original products can lead to increased demand for substitutes.
An increase in the demand for one good generally leads to an increase in demand for its complements.