Changes in Demand Changes in Demand A demand

Changes in Demand

Changes in Demand • A demand curve is accurate only when all other factors are constant • When things do not remain constant, the demand curve shifts • The Quantity demanded (Qd) changes at every price because of something other than a price changed

Change in Demand Price Quantity

Does a change in the price of goods shift the demand curve? NO!!!

• A change in price causes a movement along the demand curve. This is called a change in quantity demanded

The causes of a demand curve shift • Substitute & compliment price changes • Consumer Expectations • Population • Consumer Tastes and Advertisements • Others…

Substitutes • Something that is similar to another product • When the price of good A increases and causes the demand for good B to increase, than the two goods are substitutes.

Compliment • When a decrease in the price of one good causes the demand for another good to increase • Happens with two goods that are bought and used together

Normal Goods vs Inferior Goods Normal Goods Inferior Goods • a good that consumers • A good that demand more of when consumers demand their income increases less of when their incomes increase • Since you make money, you can afford something better.

Normal or Inferior Good?

Consumer Expectations • Expectations about the future • What if someone told you a bike would be on sale in a week, which way would the demand curve shift on that day you found out about the impending sale?

Consumer Tastes and Advertising • Fads affect demand

Advertisements • Good advertisements can increase demand

Partner Activity • In your bell work please do the following: • Write a specific market at the top (Shoes for example) • Write a scenario that will impact that market (Adidas spends 50 million dollars on a new advertisement campaign). • Pass the paper behind you

Partner Activity • Read your market and the scenario. • Determine if the scenario would have an effect on the demand curve. • If it does, correctly shift the curve • If it has no effect on the demand curve, than don’t shift the curve and show the correct impact… • Then explain why. The demand may increase or decrease in some cases