Ceteris Paribus “All other things held constant” Demand curves are accurate as long as there are no other changes than PRICE Price causes movement ALONG the demand curve Other factors cause the demand curve to SHIFT

A shift in a demand curve is not the same as moving along a demand curve.

Normal v. Inferior Goods Most goods are normal goods- goods we demand more of when our income increases Ex. new cars, HDTV Inferior goods are those you would buy in smaller quantities if income increased Ex. generic products, used cars

What causes a shift? Income Consumer Expectations Inferior goods are purchased when income drops Expectations of higher or lower prices in the future can cause demand to increase or decrease

What causes a shift? Population Consumer Taste/Advertising Rise in population creates higher demand for housing, food, utilities, etc. Advertising & publicity often play a role in creating fads & social trends

Complements v. Substitutes Complements are two goods that are bought and used together Examples? Substitutes are goods used in place of one another

We can sum up these factors as: T Tastes & preferences R Related goods I Income P Population E Expected pricing Complete demand scenarios worksheet on your own.