Download Factors Affecting Quantity Demanded

Factors Affecting Quantity Demanded
Price is not the only factor that affects quantity demanded for goods and
service.
1. Price of
Substitutes Goods
2. Price of
Complementary
Goods
A good that can replace another
(ex. margarine for butter, pop for
juice OR Coca Cola for Pepsi)
Coca Cola (P  D )
Two goods used together
(ex. Film and camera, cars and gas,
ketchup and hotdogs)
Gas price 
Pepsi (D  )
demand for smaller
vehicles 
3. Consumer Income
More money consumers have to
spend, the higher the demand for
goods and services
Income  Luxury items
Income  Luxury items
Inferior goods: goods you buy less
of when you have more money.
Ex. Steak verse hamburger
4. Taste and
preferences
Trends, fads, environment,
advertising all affect demand
5. Expectations
about future
Prices
If people think prices will increase
in the future, more goods will be in
demand now
6. Demography
Study of the population (size, age,
buying habit, etc…)
Businesses use demographics to
make decisions (what to sell, price,
where to sell, when, etc..)
D:\234828666.doc
Doctors report apples
good for us …
Demand for apples 
Gas  tomorrow,
Demand

today
population
demand overall for
goods
Factors Affecting Quantity Supplied
Supplying goods and services can be affected by several factors other
than price.
1. Production Cost
Cost associated with
supplying goods or
services
Wages ,
cost of supply 
quantity supplied 
(unless price )
Ex. Rent, materials,
wages
2. Change in
Technology
Advancement in
technology can create
efficiency of
production—affecting
supply
Technology 
costs 
quantity supplied
3. Owner’s Desire
Choice of the owner
Quantity
supplied
4. Weather conditions
Critical for agriculture Bad conditions
 output price
good conditions
output price
D:\234828666.doc