1. Determinants of Demand Review

2. Determinants of Demand
Income
Tastes and Preferences
Price of Substitute Goods
Price of Complementary Goods
Weather
Number of Buyers
Expectations

3. Income
If income increases, the demand for cars increases. (normal good)
If income increases, the demand for store brand/generic cereal decreases. (inferior good)

4. Tastes & Preferences
Bell bottoms are out of style, so the demand for bell bottoms will decrease.
A popular celebrity is seen wearing Converse shoes, so the demand for Converse shoes will increase.

5. PRICE of Substitute Goods
The price of turkey has increased, so the demand for ham will increase.
Butter is on sale, so the demand for margarine will decrease.

6. PRICE of Complementary Goods
The price of bagels has increased, so the demand of cream cheese will decrease.
The price of hot dogs has decreased, so the demand for hot dog buns will increase.

7. Weather
When it’s the rainy season, the demand for rain boots will increase.
In the summer, the demand for winter coats decreases.

8. Number of Buyers: **POPULATION**
New families move into Paulding County, so the demand for food at Paulding County grocery stores will increase.
People move out of Dallas, so the demand for products at Wal-Mart in Dallas will decrease.

9. Expectations
TVs are expected to go up in price IN TWO MONTHS, so the demand for TVs increases RIGHT NOW.
Sally thinks she is getting a raise next month, so her demand for new clothing increases.
Studies show that soda is harmful to your health, so the demand for soda will decrease.