The Factors in the Demand Environment

Increase in Demand - Substitutes

http://www.harpercollege.edu/mhealy/eco212i/lectures/s&d/s&d.htm

The blue line represents demand before the increase in price, the red line shows the increase in quantity demand. I chose to use substitutes as the factor in the demand environment. Substitutes affect demand by offering consumers a product that is similar to the original, but at a different price, usually without any noticable change difference in quality. One example of this would be replacing a name brand of bread, such as Sara Lee for a store brand like Fred Meyer. The store brand is still pretty good, but it costs less. So if Sara Lee ever increased their prices, the demand for it would fall and people would most likely start buying a store brand as an alternative.

Decrease in Demand - Complimentary

http://www.harpercollege.edu/mhealy/eco212i/lectures/s&d/s&d.htm

Complimentary products have the ability to affect demand negatively when there is a significant increase in price of a product's compliment. For example, if prices were to increase on hot dogs, demand would fall not only on hot dogs, but also buns and perhaps some condiments. Relish, would probably be the most affected because it goes best with hot dogs, not really much else. Mustard and ketchup demand would also be affected, showing how an increase to the price of one thing has the ability to affect other products as well.