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What Factors Affect Demand?The Ceteris Paribus Assumption A demand curve or a supply curve is a relationship between two, and only two, variables: quantity on the horizontal axis and price on the vertical axis.Willingness to purchase suggests a desire, based on what economists call tastes and preferences.Professors are usually able to afford better housing and transportation than students, because they have more income.The assumption behind a demand curve or a supply curve is that no relevant economic factors, other than the product's price, are changing.We defined demand as the amount of some product a consumer is willing and able to purchase at each price.If you neither need nor want something, you will not buy it. Ability to purchase suggests that income is important.Exactly how do these various factors affect demand, and how do we show the effects graphically?To answer those questions, we need the ceteris paribus assumption.

What Factors Affect Demand?
We defined demand as the amount of some product a consumer is willing and able to purchase at each price. That
suggests at least two factors in addition to price that affect demand. Willingness to purchase suggests a desire, based
on what economists call tastes and preferences. If you neither need nor want something, you will not buy it. Ability
to purchase suggests that income is important. Professors are usually able to afford better housing and transportation
than students, because they have more income. Prices of related goods can affect demand also. If you need a new
car, the price of a Honda may affect your demand for a Ford. Finally, the size or composition of the population can
affect demand. The more children a family has, the greater their demand for clothing. The more driving-age children
a family has, the greater their demand for car insurance, and the less for diapers and baby formula.
These factors matter for both individual and market demand as a whole. Exactly how do these various factors affect
demand, and how do we show the effects graphically? To answer those questions, we need the ceteris paribus
assumption.
The Ceteris Paribus Assumption
A demand curve or a supply curve is a relationship between two, and only two, variables: quantity on the horizontal
axis and price on the vertical axis. The assumption behind a demand curve or a supply curve is that no relevant
economic factors, other than the product’s price, are changing. Economists call this assumption ceteris paribus, a
Latin phrase meaning “other things being equal.” Any given demand or supply curve is based on the ceteris paribus
assumption that all else is held equal. A demand curve or a supply curve is a relationship between two, and only two,
variables when all other variables are kept constant. If all else is not held equa