Supply, Demand and Equilibrium

Non-Price Factors of Demand

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Ben Whitten

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Carys Brown


Non-price Factors of Demand

In a market economy, comumer soveriegnty means that buyers determine the level of demand for certain goods and serivices, and producers will respond to these changes by adjusted quanity produced.

Various non-price factors that affect consumers levels of demand indicate a shift in the entire demand curve. Comparatively, a change in the price of good will show a movement along the demand curve. 


If the levels of disposable income (Yd) rises for households, then consumers will have more purchasing power and spare space in the budget to spend on goods and services. Therefore, demand for goods rises are incomes rise also. The opposite is true if the level of incomes decrease, then demand for goods and services decreases also. 

Topic Menu
The Law of Supply
Non-Price Factors of Supply
The Effects of Changes of Non-Price Factors - Supply
The Law of Demand
Non-Price Factors of Demand
Effects of Changes in Non-Price Factors - Demand
Market Equilibrium
The Concept of Surplus' and Shortages
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As we are living in an age where the popualtion is growing rapidly and people are living for longer, this means that the size of the market is increasing. With more people within a market, the level of demand rises for certain goods and services. For example, childcare services and retiremnet facilities have an increased level of demand to accommodate for the growing population. 

Tastes and Preferences

When peoples tastes change to follow trands or changes within the economy, then demand for different goods will shift to follow the prefernces of people. This follows the principle of 'consumer sovereignty,' referring to buyers ability to determine what will be produced and how much. An example of this is the shift in demand for new technology and digital alternatives. 

Prices of Substitutes and Complements

Most goods or services will a substitute products that satisfy the same wants. For instance, instead of ice-cream, you can substitute it will cake. If the price of ice-cream, increases, then the demand for ice-cream will decrease, however, the demand for substitute goods, such as cake, will increase as consumers are looking for cheaper alternatives.

Comparatively, some goods have complementary products, this means that these goods are commonly bought together. For example, socks and shoes. If the price of shoes increase, then the demand for shoes will decrease and the quantity bought will fall. In turn, if less shoes are being bought then less socks will be bought also. 

Expected Future Prices

If consumers have expectations of future prices, their spending habits today may be altered. A good example of this is the price of petrol as its value changes daily. If consumers expect the price to increase next week, then they are more likely to purchase petrol for a cheaper price this week.