Factors affecting demand
It is assumed that there are six main factors affecting the demand:
- income: when consumer`s income increases, he or she usually buys more goods which increases the demand
- prices of substitutes goods: when
the price of substitute good (e.g. banana) increases, a consumer
normally gives up at least some of its consumption and as a result the
demand (e.g. for pinapple) increases
- prices of complementary goods: when the price of complementary good (e.g. coffee) increases, a consumer normally gives up at least some of its consumption and as a result the demand (e.g. for sugar) decreases
- number of consumers: when the number of consumers increases there are more people who buy the good and as a result the demand increases
- consumers´ tastes: when a consumer likes the good more he or she buys it more and the demand increases
- consumers´ future expectations: when consumers expect higher prices in the future, they buy more goods in order to avoid higher prices and as a result the demand increases