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demand curve generally slopes down from left to right
. 
(a) 
As we saw earlier, the curve is downward sloping because progressively larger quantities are 
demanded as price falls. 
(b) 
A fall in the good's price means that it becomes cheaper both in relation to the household's 
income and also in relation to other (substitute) products. Therefore the overall size of the market 
for the good increases. The converse argument applies to an increase in prices; the size of the 
market will shrink as the good becomes more expensive.
Several factors influence the total market demand for a good. One of these factors is obviously its price, 
but there are other factors too, and to help you to appreciate some of these other factors, you need to 
recognise that households buy not just one good with their money but a whole range of goods and 
services.
Factors determining demand for a good 

The 
price
of the good 

The size of 
households' income 
(income effect)

The price of other 
substitute goods
(substitution effect) 

Tastes
and fashion 

Expectations
of future price changes 

The 
distribution of income
among households 
The 
income effect 
reflects the impact of a price change on consumers' income. If the price of a good 
falls, all other things being equal, consumers become better off, as their real income has increased. 
Therefore they can afford to buy more of the good, following its fall in price.
The income effect can also be reinforced by the 
substitution effect
. The substitution effect
 
occurs when 
consumers buy more of one good and less of another good because of relative price changes between 
the two goods. For example, if two types of bread are considered substitutes, the price of bread 1 falls 
relative to the price of bread 2, then consumers will buy more of 1 than 2: they substitute bread 1 for 
bread 2. 
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