Question

When a non-price factor changes--such as income, expectations, prices of related goods, consumer preferences, or the number of buyers, there is a change in: _________________

Answer 1

Answer: Demand

Explanation:

Determinants of demand includes:

(i) Income of an individual: There is a positive relationship between the income of an individual and demand for a normal good. On the other hand, there is a negative relationship between the income of an individual and demand for a inferior good. This change in income shifts the demand curve.

(ii) Prices of related goods:

Substitute goods: There is a direct relationship between the price of one good and demand for its substitute goods.

Complimentary goods: There is a inverse relationship between the price of one good and demand for its complimentary good.

This determinant of demand also shifts demand curve.

(iii) consumer preferences: Favorable consumer preferences increases the demand for a particular good and shifts the demand curve rightwards.

(iv) Number of buyers: If the no. of buyers increases in an economy then as a result demand for goods increase which shifts the demand curve rightwards and vice-versa.

(v) Expectations: If the expected price of a particular good increases in the near future then as a result demand for that good increases in present.