Shifts of the Demand Curve

1
Shifts of the Demand Curve

• Section 4.2

2
Demand Curve

• Accurate as long as there are no changes except
  in price
• When only price changes you move along the demand
  curve

3
Change In Demand

• When other things change besides price the demand
  curve will shift to the left or right
• Consumers will pay a new price to buy a different
  quantity

4
Causes for Change

• Income
• Normal Goods Goods consumers demand more of
  when their income increases
• Inferior Goods Increases in income cause demand
  for a good to fall

5
Causes for Changes

• Expectations
• Demand is positively related to our future
  expectations of a goods price. If we expect the
  price to rise, demand will rise and vice versa

6
Causes for Changes

• Population
• As population increases demand increases

7
Causes for Change

• Changes in consumer preferences and advertising

8
Price of Related Goods

• Complements
• Two goods that are bought and used together
• Salt and Pepper
• Ski Boots and Skis
• Substitutes
• Goods used in place of one another