Change in Demand Change in the Quantity Demanded

Change in Demand

Change in the Quantity Demanded • When only the price changes and all else remains constant, there is a change in the quantity demanded • A change in quantity demanded is a movement along the original demand curve

Change in the Quantity Demanded

Change in Demand • There are several factors that can cause the demand curve to shift • These are all factors other than price that result in an entirely new demand curve

Change in Demand • Consumer income • Consumer Tastes • Prices of related goods • Substitutes • Complements • Expectations • Number of Consumers

Change in Demand • All factors that change demand result in a new demand curve can increase or decrease demand • When demand increases the curve shifts right • When demand decreases the curve shifts left • The demand curve never shifts up or down

Change in Demand

Demand Elasticity • Demand Elasticity is the extent to which a change in price causes a change in the demand for a product • Elastic Demand – change in price creates a large change in demand • Inelastic Demand – change in price does not affect demand in a significant way

Demand Elasticity • Can the purchase be delayed? • If the purchase can be delayed the product is generally elastic • Are adequate substitutes available? • When substitutes are available the product is generally elastic • Does the purchase use a large portion of income? • When larger purchases are concerned, products are very elastic