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Presentation transcript:

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The Demand Curve Shifts 4 Section 2 The Demand Curve Shifts © EMC Publishing, LLC

When Demand Changes, the Curve Shifts Demand can change. Increase = shift to the right Decrease = shift to the left © EMC Publishing, LLC

Exhibit 4-3 from the Student Text In the graph, the demand curve in the middle, the one labeled D1, is the starting point. On this curve, what is the quantity demanded at a price of $1? (Answer: Four hundred quarts of orange juice.) © EMC Publishing, LLC

What Factors Cause Demand Curves to Shift? Five factors cause demand curves to shift: Income. As a person’s income changes, he or she may buy more or less of a certain good. Normal good Inferior good Preferences. Changes in preferences cause changes in demand. © EMC Publishing, LLC

What Factors Cause Demand Curves to Shift? (cont.) Prices of related goods. Substitute goods: replacements. Complements are goods used together. Number of buyers Expectations (6 months to 1 year) Good times Bad times © EMC Publishing, LLC

What Factor Causes a Change in Quantity Demanded? Quantity demanded = price. Remember: Demand and quantity demanded are not the same thing. © EMC Publishing, LLC