What are the five factors that cause an increase or a decrease in demand? Can you give examples of each?

We will identify five factors, and give examples of each first, when they cause an increase in demand, and second, when they cause a decrease in demand.

Population shifts:

1. As any significant population group grows, demand for most goods and services will increase, or shift to the right. For example, as the Vancouver population grows, the demand for cigarettes will shift to the right.
2. As any significant population group declines, demand for most goods and services will decrease, or shift to the left. As the Newfoundland population declines, the demand for housing in the province will shift to the left.

Income:

1. First, let's define a normal good. A normal good is a good for which demand increases when income increases (e.g., travel packages to the Queen Charlotte Islands). As incomes in the Vancouver area increase, the demand for mountain hiking packages will increase.
2. Second, we need to review the definition for an inferior good. An inferior good is a good for which demand goes down when incomes increase (e.g., as incomes rise in Mississauga, Ontario, the demand for hamburger will decline).

Price of Related Goods:

1. A rise in the price of a substitute for a good or service increases the demand for the other good or service (e.g., a rise in the price of mountain bicycles in Hamilton, Ontario, increases the demand for regular bicycles).
2. A rise in the price of a complement to a good or service will decrease the demand for the other good or service (e.g., a rise in the price of HP printers in Calgary will decrease the demand for Packard Bell computers).

Preferences of Consumers:

1. As people decide that they favour a good more and more, they plan to demand more (e.g., as people in the Vancouver area favour bottled water to a greater extent, the demand for bottled water rises).
2. As people decide that they favour a good less, they will plan to demand less of it (e.g., as consumers in the Montreal area decide that they favour beef less, the demand for beef declines).

Expectations concerning future prices:

1. If consumers expect the price of a good or service to rise in the future, they will buy more of it today (e.g., Vancouver area consumers expect the price of hydro electric to rise in the future, so they will buy more hydro contracts in the current period).
2. If consumers expect the price of a good or service to fall in the future, they will buy less of it today (e.g., Markham, Ontario, consumers expect the price of cell phones to fall in the future, and buy fewer cell phones in the current period).