What are the determinants of demand demand 1 price of

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Unformatted text preview: Price of the product [P(x)] 2. Non-price determinants of 2. demand (see list next slide) demand 8 NON-PRICE DETERMINANTS NON-PRICE OF DEMAND OF 1. Tastes and Preferences Tastes 2. Income 3. Price Expectations 4. Prices of related goods A. Complements B. Substitutes 5. Number of buyers 9 LAW OF DEMAND: PRICE AND LAW QUANTITY ARE INVERSELY RELATED, (all other things equal) equal) A change in the P(x) causes change movement along a given demand schedule Substitution effect Real Income effect A change in the P(x) cannot cause change cannot a shift of the demand schedule for X. X. A change in P(x) causes a change change in the quantity demanded. quantity 10 10 AN INDIVIDUAL BUYER’S DEMAND AN FOR COMPACT DISCS: Text, page 56 56 Figure 3.1 CHANGES IN NONPRICE CHANGES DETERMINANTS OF DEMAND DETERMINANTS...
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