Sunday, 13 October 2013

Factors affecting Demand

Non – Price Factors


  • Changes in non – price factors will cause a shift in the demand curve

Factors affecting Demand

  • Income - rise in income leads to a shift right (more disposable income)
  • Interest Rates - rise in interest rates leads to a shift left (greater mortgage interest payments -> less disposable income)
  • Price of Complementary good - rise in the price of a complementary good will cause a shift left
  • Price of Substitute good - rise in price of a substitute good will cause a shift right (less price competitive)
  • Population - an increase in population causes a shift right 
  • Fashion - increase in fashion/trends causes a shift right
  • Advertising - increase in advertising causes a shift right