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The Determinants of Demand

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The Determinants of Demand
The Determinants of Demand
Economic demand- how much of an item one is willing, ready and able to purchase- depends on a number of different factors. For example, people probably care about how much an item costs when deciding how much to purchase. They might also consider how much money they make when making purchasing decisions, and so on.

Economists break down the determinants of an individual's demand into five categories:

  • Price
  • Income
  • Prices of Related Goods
  • Tastes
  • Expectations
Demand is then a function of these five categories. Let's look more closely at each of the determinants of demand.

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