Ceteris Paribus Conditions for Demand:
Prices of
Related Goods: Substitutes and Complements
Substitutes: Assume that a Ford is a substitute for
a Honda:
If the price Hondas increases, then some potential Honda buyers will switch to
(substitute) Fords. Demand for Fords
will increase (shift to the right), holding all other factors constant (ceteris
paribus).
Complements: Assume that
gasoline and cars are complementary goods: If
the price of gasoline increases, then demand for cars will decrease (shift to
the left).
Normal Goods: If income
increases, then consumption increases
Inferior Goods: If income
increases, then consumption decreases
Weather - Example: Snow will increase the
demand for snow skis. Rain will
increase the demand for taxis.
Population - Example: An increase in population will shift the demand
curve to the right.
Note: This is not an exhaustive
list, but the most common ceteris paribus conditions for demand found in
typical economics textbooks.