determinants of demand

If the good's own price slides you along the demand curve, what makes the whole curve jump left or right? Those other forces are the determinants of demand — the handful of things that change how much people want to buy at every price. When any of them changes, the curve shifts and the equilibrium price moves, even if the good's own price hasn't budged yet. Spotting which one is at work is how you predict where prices are heading.

There are five usual suspects, easy to remember. First, income: for most goods (called normal goods) more income means more wanted; for a few (inferior goods, like instant noodles) more income means less wanted, as people trade up. Second, the prices of related goods: if a substitute gets dearer (tea, when coffee is what you sell) demand for yours rises; if a complement gets dearer (printers, when you sell ink) demand for yours falls. Third, tastes and preferences — fashion, fads, health news, advertising. Fourth, expectations: if buyers think prices or incomes will rise tomorrow, they buy more today. Fifth, the number of buyers: a bigger or growing market shifts demand right.

Keep two things straight. The good's own price is deliberately not on this list — it causes a movement along the curve, not a shift, and that boundary is the whole point. And these are tendencies, not guarantees: whether a good is normal or inferior, or how strongly tastes respond, varies by person, place, and era. Real markets often see several determinants move at once — incomes up but a substitute also cheaper — so the net shift can be hard to call. Still, naming the determinant behind a price move turns a mystery into an explanation.