6 Non-price determinants of demand

Aside from price as a major factor affecting the quantity demanded by the consumers, the following factors are important to consider in order to understand why demand curves shift either to the right or to the left of the original demand curve.

1. Taste and Preference
2. Income
3. Size of the Population
4. Prices of Related Goods
5. Price and Income Expectation
6. Range of Goods Available (Seasonality)

These 6 non-price determinants of demand are explained below.

1. Taste and Preference
Every individual has his/her own preference or standing with regards to choosing a particular good. Basically, if a person feels that he/she will be maximizing satisfaction from a good or a service, then most probably the demand for such good/service will increase.

2. Income
Aside from price, income is a major factor affecting the decision of the costumer on how much to demand for a good or a service. Income is either consumed or saved. The consumption component is where quantity demanded for goods and services may derive. Basically, with higher income, the more the tendency for a consumer to demand for more goods and services, and that the lesser the income, the lesser is the demand.

However, the income effect could be dependent on the type of good or service demanded. For normal goods, a higher income will cause consumers to demand more of the goods or service. In contrast, with higher income, consumers will tend to consume less of inferior goods and services.

3. Size of Population
The number of buyers in the market affects the quantity demanded for a particular good or service. The more rapid is the increase in the population, the greater is the demand for goods especially the basic commodities and a reverse situation with less population.

4. Prices of Related Goods
(Two) Goods may be complements (one cannot function without the other one) or substitutes. Complementary goods are commodities where one cannot function in the absence of the other. In the case of gasoline and vehicle the increase in the price of gasoline will result to the decrease in the demand for vehicle. In the case of substitute goods, one good can function even in the absence of the other good. The increase in the price of rice resulted to the increase in the demand for bread as a substitute to rice.

5. Price and Income Expectations
When consumer expects that the price of a certain good will increases in the future, their current demand for that good will increase. While income expected to increase in the future, current consumption level tend to increase that results to increase in the demand for goods and services.

6. Range of Goods Available
Demand is said to exhibit seasonality when the time-series undergoes a predictable cyclic variation depending on the time within the year. Products which are unavailable in certain seasons of the year or products which are available throughout the year but associated quantity and price fluctuation are termed as seasonal goods.