Non-price Determinants-Supply & Demand

The non-price determinants of supply include:

1. Changes in costs of factors of production (land, labour, capital, entrepreneurship). As there is an increase in costs of production → the supply shifts to the left, meaning there would be less supply, or in other words you would have to pay more for the same quantity.
   
2. State of technology, as technology Improves- supply shifts to the right (meaning more supply for cheaper prices)
   
3. Price of related goods: An increase in the price of a related good can influence the supply of the original good. Consider the tradeoff in the production of corn and wheat. If the price of corn rises relative to the price of wheat, it would probably be profitable to move resources from wheat production to corn production. This will cause the supply curve of corn to shift to the right and the supply curve of wheat to shift to the left.
   
4. Future expectations: if demand for the product is likely to rise, companies increase their supply (in order to be ready to supply more in the future and gain higher profit for example prior Christmas there would be an increased production of decorations.)
   
5. Government intervention: 
• Indirect taxes → increase costs → supply shifts left (less supply, increase in price)
• Subsidies → reduce costs → supply shifts right (more supply, cheaper price)
•  other ways to intervene -exchange and interest rates.
  
6. Size of the market: more firms producing the same or a very similar good means more supply overall, therefore supply of the market shifts to the right as more are being supplied at each price level.
   
7. Weather/seasonality: Affecting mostly agriculture, long periods of rain or drought can influence the quantities of crop received at the end. As well as during winter seasons many countries aren't able to grow their own crops/vegetables-decreasing supply.
   
8. Supply Shock: An unexpected event(political or environmental) that changes the supply of a product or commodity, resulting in a sudden change in its price and it's effect is almost always negative 

A shift in supply could be caused by:

supply shock:A sudden political or environmental situation may change the supply of currency.
government intervention: in different situations governments could impose a different exchange rate causing a shift in the market of a currency.

future expectation: if there's a serious depreciation expected in a currency in relation to another, the country/government might take measures to prevent that from happening.

The non-price determinants of demand include:

1. Income: As income rises, demand for normal goods rises causing the demand curve to shift to the right. Yet the demand for inferior goods usually falls, demand curve shifts to the left.
   
2. Consumer expectations of future: When consumers expect the prices of a certain good to drop in the future, the demand at the moment will fall and rise when the prices drop, and vice versa.
   
3. Consumer Tastes & Preferences: If consumer change their tastes in favor (for example an advertising campaign) then demand curve shifts to the right.
   
4. Price of related goods (substitutes and complements): 
• As price of substitutes increases (movement along the curve) the demand shifts to the right. 
• As price of complements increases (movement along the curve) the demand shifts to the left.
5. Demographic changes: if population grows, the demand for most products will increase, thus the demand curves shift to the right as more will be demanded at each price level.
   
6. Weather/seasons: as a country is entering a rainy season, the demand for umbrellas would increase greatly. 

A shift in demand could be caused by:

weather/seasonality: many countries which depend largely on tourism see great demand in their currency over the seasons.

 
price of related goods(other currencies): If certain countries are for example experiencing high inflation then their currency would appreciate and there would be less demand for it as it would become more expensive to obtain (as well as their exports) 

consumer expectations for the future: If consumers expect the value of a certain currency to depreciate, then the demand for it at the moment might drop as consumers would be waiting for the depreciation before exchanging their money.