LO To explain the shifts in the demand curve. Changes in Demand LO To explain the shifts in the demand curve.

Key Term – Inferior good

An increase in demand is when the entire demand curve shifts to the right. Therefore the demand increases when the prices stays the same. A decrease in demand is when the entire demand curve shifts to the left. Therefore the demand decreases while the price stays the same.

Change in demand. An example but we will draw our own.

Factors that cause demand curve to shift. PASIFIC Population – size and composition of population. E.g If more elderly people more demand for elderly products. Advertising – Good and Bad advertising. E.g Ratners – Move D – D2 Substitutes – If price of substitute goes up, demand for your good increases. Likewise if price of substitute goes down, demand goes down,

Normal good - Income up can affect butter D-D1 Income - Whats important here is the difference between a ‘normal’ and ‘inferior’ good. Normal good – butter Inferior good – margarine Normal good - Income up can affect butter D-D1 Income down can affect butter D- D2 Inferior good - Income up demand shifts D-D2 (more people buying butter) Income down demand shifts D- D1

Fashion = Item in fashion D1, Out of fashion D2 Interest Rates - Linked to income. If interest rates go up, so does your mortgage, therefore less income. So revert to income. Compliments - Goods that go together. E.g DVD player and DVD discs. Price of discs goes down, demand for DVD player goes up.

HW Activity 1 & 2 Page 19