People know that price of the good itself is the main factor that affects the quantity of demand. However, there are actually other factors which would affect quantity of demand too.
First, we could think about level of income. Example, normally Mr Lee‘s monthly salary is RM 2,500, if his salary had been increase to RM 3,500 per month, his demand of buying particular goods will increase too.
Besides that, the price of a related good, such as Substitute good will affects the quantity of demand too. A substitute good is a replacement good for one similar product. When the price of one good increases, demand for the substitute will increases. Example, when the price of Coke increase, customers will tend to buy Pepsi as a substitute good, which increases the demand of Pepsi.
According to Boundless.com, different customer’s taste lead to increased or decreased demand, which is one factor that economists consider when looking at changes in demand. For example, since Ali would always choose Nokia, the demand of Nokia would always higher than HTC.
Lastly, consumer’s expectations about future prices are the last factor. For example, if the price of Proton expected to fall next month, the demand for Proton this month will fall because customer would wait for the price to fall next month.
Reference-
Boundless (n.d) Factors Shifting the Demand Curves, Changes in Preferences or Tastes. Available from: https://www.boundless.com/economics/principles-of-supply-demand/factors-shifting-the-demand-curves/changes-in-preferences-or-tastes/ [Accessed 9 July 2013]
Written By
Soh Khuan Ming
Soh Khuan Ming
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