1. Determinants of Demand
S&D #7
Determinants of Demand
Why might demand go up or down even if the price of the product remains the same? Imagine that the Subway across the street sells 40 $5 foot longs on an average day. Why might quantity demanded go up to 60 even if the price stays at $5?

2. Graphing Demand
Price
Quantity Demanded $3 60 $5 40 $7 20

3. With 2 dashed lines, draw the following on the same graph!
Price
Quantity Demanded $3 80 $5 60 $7 40
Price
Quantity Demanded $3 50 $5 30 $7 10

4. Determinants of Demand: factors (other than price) that affect demand
Consumer Income:
Normal goods: real income increase, demand of these increases
TVs, steaks, cell phones
Inferior goods: real income decreases, demand of these increases
Laundry mat, used products, bologna

5. 2. Price of Related Goods Substitutes:
Price of sub increases, demand of original increases
Price of sub decreases, demand of original decreases
Price of El Pollo Loco doubles! Will demand for Subway increase or decrease?

6. B. Complements: products that you buy together
EX: milk & cookies
Airplane tickets & hotels
Price of complement increases, demand for original decreases
Price of complement decreases, demand for original increases
If there’s a huge salsa sale, what will happen to the demand for chips?

7. 3. Types of consumers
Increase in elderly – demand for “elderly” products will increase
Ex:
Increase in teenagers – demand for “teen” products will increase
Right now, which group is larger? Who should you make products for?

8. 4. Consumer Expectations
How do most ppl feel about the economy right now?
If consumers expect econ to be bad – demand decreases
If consumers expect econ to improve – demand increases

9. 5. Consumer preferences The last answer!
How ppl feel about the product – is it “cool”?