An increase in demand means that consumers plan to purchase more of the good at each possible price. The price of related goods is one of the other factors affecting demand. Related goods are classified as either substitutes or complements. Substitutes are goods that satisfy a similar need or desire. An increase in the price of a good will increase demand for its substitute, while a decrease in the price of a good will decrease demand for its substitute.
Complements are goods that are used jointly.
An increase in the price of a good will decrease demand for its complement while a decrease in the price of a good will increase demand for its complement. Income is another factor that can affect demand. If a good is a normal good, increases in income will result in an increase in demand while decreases in income will decrease demand. If a good is an inferior good, increases in income will result in a decreasein demand while decreases in income will increase demand. C. Other Supply Factors 1.