4.2 Notes Shifts in Demand

Topic 4.2 Shifts in the Demand Curve
Objectives
1. Understand the difference between a change in quantity demanded and a shift in the demand curve.
2. Identify several factors that determine demand and can cause a shift in the demand curve.
3. Explain how the change in the price of good can affect demand for a related good.

The demand schedule only took prices into account, while keeping all other factors the same, or constant. What if a government report came out that stated eating tomato sauce is the best way to cure a cold? What would happen to the demand of pizza?





Graphing Changes in Demand

Change in Quantity Demanded Demand shifting to left














Demand shift to right














Factors that cause the demand curve to shift

1. Income

Normal Good – A good that consumers demand more of when their incomes increase.

EX: New clothing, Roast beef sandwiches

Inferior Good – A good that consumers demand less of when their incomes increase.

EX: Used clothing, “mystery meat” sandwiches



Shift in Demand when your income increases

Used Clothing New Clothing













2. Consumer Expectations – Our expectations about the future affect are buying decisions now.

EX: A salesman tells you a bike you want will go on sale in one week so your demand for the bike now falls.

Demand for Bikes













3. Population
EX: After the baby boom, demand for bottles and baby food increased.

Demand for baby products after baby boom






4. Consumer Tastes and Advertising
EX: Nike pumps shoes, light up shoes (LA Lights), shoes with wheels.

Demand for Pumps after people thought they were not cool anymore













5. Price of Complements – Two goods that are bought and used together.
EX: Basketballs and basketball shoes

Demand for Basketballs after the price for basketball shoes goes up drastically












6. Price of Substitutes – Goods used in place of one another.
EX: Coffee and tea

Demand for coffee if the price of tea goes down