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Determinants of demand elasticity?
things that make rubber bands not work anymore? J/k I didn't know so I looked it up.
Determinants of Demand
The major nonprice determinants of demand are: (1) income, (2) tastes and preferences, (3) the price of related goods, (4) changes in expectations of future relative prices, and (5) population (I.e., market size). The major nonprice determinants of supply are: (1) input costs, (2) technology, (3) taxes and subsidies, (4) expectations of future relative prices, and (5) the number of firms in the industry.
Substitutes: a change in the price of one causes a shift in demand for the other in the same direction (e.g. butter and margarine)
Complements: a change in the price of one good causes a shift in demand for the other in the opposite direction (e.g., stereo amplifiers and speakers, nuts and bolts)
Distinguish between Changes in Demand and Changes in Quantity Demanded
Change in Demand—results from change in a non-price determinant of demand (curve moves)
Change in Quantity Demanded—results from change in price (move along curve)
Taken from http://campus.greenmtn.edu/faculty/gregbrown/sc310/sc310nt1.html
Necessities versus Luxuries Availability of Close Substitutes Definition of the Market Time Horizon Relative Size of Purchase
