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Determinants of Demand (Price (Extension (price decreases, quantity…
Determinants of Demand
Price
Movements along the curve
Extension
price decreases
quantity demanded increases
Contraction
price increases
quantity demanded decreases
Income
Causes shifts
Disposable income
Income left after all deductions are made
Income tax
direct tax applied to the income of the population
Percentage of your nominal income
Pension funds
Percentage of your income put aside for retirement age
Union fees
money discounted from union members
Types of goods
Normal
income increases
demand increases
Inferior
demand decreases
income increases
Veblen
opposite demand curve
the higher the price the more demand
Special goods and services
Give you status
Conspicuous consumption.
Substitutes goods
Price of one increases demand for the other increases (vice-versa)
Complementary goods
Price of one increases demand for the other decreases (vice-versa)
Ex. toothpaste and toothbrush
Tastes and preferences
Advertising
Demographic changes
Changes in the characteristics of populations
Natural disasters
Emigration or immigration
Population structure
Political unrest
Epidemia