Demand shifters narration

8
Demand Shifter Review

description

Explanation of the demand shifters

Transcript of Demand shifters narration

  • 1. Demand Shifter Review
  • 2. Changes in Quantity Demanded Change in the quantity demanded due to a PRICE change occurs ALONG the demand curve Demand Curve for Widgets At $3 per Widget, the Quantity demanded of widgets is 6. $6 An increase in the Price of $5 Widgets from $3 to $4 will lead to a decrease in the Quantity Demanded of Widgets from 6 to 4. $4Price per Widget $3 Demand Curve for Widgets $2 $1 $0 0 2 4Quantity Demanded of Widgets8 6 10 12
  • 3. Changes in DemandChanges in any of the factors other than price of the item causes the demand curve to shift either: Decrease in Demand shifts to the Left (Less demanded at each price) OR Increase in Demand shifts to the Right (More demanded at each price)
  • 4. Changes in Demand Demand CurveDemand Increase in for Widgets Several factors will change the demand for $6 $6 the good (shift the entire demand curve) As an example, suppose $5 $5 consumer income increases. The demand for Widgets at all prices will increase. $4 $4Price per WidgetPrice per Widget $3 $3 Orginal Demand Curve Demand Curve for Widgets New Demand Curve $2 $2 $1 $1 $0 $0 00 2 2 4 4 6 6 8 8 10 10 12 12 14 Quantity Demanded ofof Widets Quantity Demanded Widgets
  • 5. Changes in Demand Demand Curve for Widgets Decrease in Demand Demand will also decrease due to changes $6 in factors other than price. As an example, suppose $5 Widgets become less popular to own. $4Price per Widget $3 Original Demand Curve Demand Curve for Widgets New Demand Curve $2 $1 $0 0 22 44 6 6 8 8 10 10 12 12 Quantity Demanded of Widgets Quantity Demanded of Widgets
  • 6. Changes in DemandThe ENTIRE Demand Curve can SHIFT to the LEFT (less) or RIGHT (more) inresponse to the following factors:1. Income: changes in consumers income For example, you get a job and have more money so you demand more clothes or movie tickets. (Demand curve shifts RIGHT)2. #of Consumers: changes in the number of consumers For example, Many tourist come to town in the summer and the demand for ice cream goes up at all prices.(Right) In the winter demand goes down at all prices. (Left)3. Tastes and Preferences: changes in preference or popularity ofproduct/service For example, everyone starts eating FroYo instead of ice cream so the demand for ice cream goes down at all prices.(Left)4. Expectations: changes in what consumers expect to happen in thefuture For Example, everyone expects a hurricane to hit, so the demand for bottled water and batteries goes up at every price. (Right)
  • 7. Changes in DemandPrices of related goods also affect demand 5. Substitute goods when a substitute is a product that can be used in the place of another. The price of the substitute good and demand for the other good are directly related For example, if the price of Coke goes up, the Demand for Pepsi goes up People will buy Pepsi instead if Coke prices are high (Shift in Pepsi curve to Right) 6. Complementary goods a complement is a good that goes well with another good. When goods are complements, there is an inverse relationship between the price of one and the demand for the other For example, Price of Peanut Butter goes up, the demand for Jelly goes down If the price of peanut butter goes way up, people will buy less peanut butter, but they will also buy less Jelly at every price (Shift in Jelly curve to Left)
  • 8. To Review.