With a change in demand, the entire curve shifts when something other than price changes.

increase in demand decrease in demand

D1 D1

P

Q

P

Q0 0

D2

Shift right

D2

Shift Left

Change in Demand

1. Change in Consumer Tastes

• advertising, news reports, fads, etc. that affect people’s decision to buy a product

• popular g/s? Shift Right

• unpopular g/s? Shift Left

Five Reasons for a Change in DemandNon-price Determinants

• Changes in income affect how much consumers can buy

• income, demand so demand curve shifts right

•(and vice versa)

2. Change in Consumer Income

• Market size is the number of people who have access to buy the good being graphed

• Product available to a larger # of consumers

demand curve

shifts right (and vice versa)

3. Change in Market Size (Population)

• Consumers will change what they buy NOW based on what they think will happen in the FUTURE

• If buyers think price will , they will buy NOW – Shift right

• If future economy looks like a recession (bad) they will stop buying NOW Shift left

4. Change in Consumer Expectations

A. Substitute - can use one good in place of anotherEx: Price of butter then demand for margarine margarine curve shifts right

B. Complement - one good needed to use another good

Ex: Price of peanut butter then the demand for jelly

jelly curve shifts left

5. Change in the Price of a Related Good

TIMER

• Taste

• Income

• Market Size

• Expectations

• Related Goods

Five Reasons for a Change in Demand

Change in QD vs. Change in DemandThe price of Coke increases. Draw the change in the Coke market and the Pepsi Market

D1D1

P

Q

P

Q 00

D2

Market for CokeChange in Price of cokeChange in QD

P1

Q1Q2

P2

Market for PepsiNo price changeChange in D –

Substitute good