Chapter 4 Section 2 Changes in Demand

Changes in the Quantity Demanded Change in Quantity demanded is a result of a change in Price This causes movement ALONG the curve showing demand (Demand Curve) When the Entire Demand Curve Shifts it is a result of something OTHER than a change in Price!!

Shift in the Demand Curve Income Effect Change in Demand as a result of lower real income Be because of rising cost of other goods etc… Substitution Effect Change in Demand because of the relative Price of a good JIF is high, people may buy Skippy

Change in Demand Change in Demand results in an entirely new demand curve Changes in Quantity Demanded only causes movement along the curve itself Please see Figure 4.4!!! In your book Movement to the right is an increase in demand, to the left is a decrease in demand

Causes of Changes in Demand Consumer Income Increases or Decreases will cause change Consumer Tastes What do people Want? Substitutes Available? Are there other similar items that can replace it? Complements How expensive are the items that go with it? Expectations Is it worth the hype? Number of Consumers Do the people still want it, change in individual demand cause change in Market Demand