Friday, March 13, 2009
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
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