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Non-Price Determinants of Demand (PTIDE) (Tastes & Preferences…
Non-Price Determinants of Demand
(PTIDE)
Prices of Related Goods
Complements (Complementary/Joint D)
:arrow_up:P of one :arrow_down:D of other
:arrow_up_small:D of final product changes derived D of good used to produce it
:arrow_up_small:P of final product influences D of another product jointly consumed with it
Substitutes (Competitive D)
:arrow_up:P of one :arrow_up:D of other
Figure 5: :arrow_up_small:P of substitutes
:arrow_up:P of books from P(A0) to P(A1)
->its QD :arrow_down: from Q(A0) to Q(A1) due to Law of Demand
->close substitutes (satisfy same consumer want)
->switch from buying books to e-books when P of books :arrow_up:
->D of e-books:arrow_up: D(N0) to D(N1) though P of e-books unchanged at P(N0)
Tastes & Preferences
Product's
desirability/attractiveness
Fashion/Fad
- Ususally huge upsurge in D during craze, then D falls to point where goods disappear from market
Advertising & Promotions
- Effective ones create wants so that at every P, consumers willing to purchase more
Gov. Policies & Action
Seasons, Weather, Festivals
- Certain goods higher D at certain times of the year
Consumer Income
Affects affordability
Normal
Good: At every P, more D with higher income
Inferior
Good: As income:arrow_up:, switch to consuming normal goods
Good can be
normal to one person
but
inferior to another
, or become inferior to
same person over time
Figure 6: Changes in consumers' income
Demographics
Population/
Market size
affects no. of consumers and potential D
Age & Gender
composition affects tastes and preferences
Consumers' Expectations
Expect P:arrow_down:, probably :arrow_down:D and postpone it
Less impact for perishable goods
:arrow_up_small:Speculative D: Involves purchase of goods to profit from its sale later if P :arrow_up:
