The reason is that a two-dimensional graph depicts the explicit relation between two variables, even though other relevant variables exist. To isolate the relation between just the two variables, and to construct the corresponding curve depicting this relation, the other factors--the determinants--are held constant.

A Demand Determinant

As an example, consider demand. The law of demand is the relation between demand price and quantity demanded. The demand curve, such as the one displayed in the exhibit to the right, graphically captures this relation, with price on the vertical axis and quantity on the horizontal axis.

However, other factors, such as the amount of income that buyers have, can also affect demand. The demand curve is constructed assuming that income is constant. If income should change, then so too does demand, resulting in a shifting or repositioning of the demand curve. To illustrate this shift, click the "Determinant Change" button.

Other Relevant Factors

Even though the price-quantity relation is the focus of attention in the study of demand, an alternative curve showing the specific relation between buyers' income and quantity, holding price and the four remaining traditional demand determinants constant, can also be constructed. In this analysis, a change in price would then cause a shift of this income-quantity curve.

The construction of a three-dimensional graph, such as one relating price, quantity, and buyers' income, is also a possibility. In this case, the ceteris paribus determinants held unchanged can be any remaining traditional demand determinants--such as, buyers' preferences, other prices, buyers' expectations, and number of buyers. A change in any of these four determinants would then cause a shift or repositioning of this three-dimensional surface.

A Few Notable Determinants

• Demand: The five key demand determinants that cause a shift in the demand curve and a change in demand are buyers' income, buyers' preferences, other prices, buyers' expectations, and number of buyers.


• Supply: The five primary supply determinants that cause a shift in the supply curve and a change in supply are resource prices, production technology, other prices, sellers' expectations, and number of sellers.


• Production Possibilities: The production possibilities curve is shifted due changes in the quantity or quality of the resources, specifically education, technology, and the quantities of labor, capital, land, and entrepreneurship.


• Aggregate Demand: The four major determinants of the aggregate demand curve are the four aggregate expenditures on gross domestic product--consumption, investment, government purchases, and net exports. Each is affected by more specific factors, such as consumer preferences, wealth, interest rates, business expectations, government policies, and exchange rates.


• Aggregate Supply: The three aggregate supply determinants are resource quantity, resource quality, and resource price. Shifts of the short-run aggregate supply curve result from changes in any of the three, while shifts of the long-run aggregate supply curve result from changes in the first two.


• Short-run Average Cost: The key ceteris paribus determinants that shift the short-run average cost curve are technology, wages, and other production costs.