Determinants of Demand

Definition

Determinants of demand are factors other than price that influence consumers' willingness and ability to buy goods or services.

Analogy

Think of determinants of demand as ingredients in a recipe. Just like different ingredients affect how tasty and appealing a dish is, determinants of demand impact how much consumers desire and purchase certain goods or services.

Related terms

Income Effect: The income effect refers to how changes in consumer income impact their purchasing power and consequently affect their demand for goods or services.

Substitutes: Substitutes are alternative goods that can be used in place of each other. When the price of one substitute increases, it may lead to an increase in demand for its substitute.

Complements: Complements are goods that are typically consumed together. An increase in the price of one complement may result in a decrease in demand for both products.