Change in Demand

Change in the Quantity Demanded When only the price changes and all else remains constant, there is a change in the quantity demanded A change in quantity demanded is a movement along the original demand curve

Change in the Quantity Demanded

Change in Demand There are several factors that can cause the demand curve to shift These are all factors other than price that result in an entirely new demand curve

Change in Demand

Change in Demand Consumer income Consumer Tastes Prices of related goods Substitutes Complements Expectations Number of Consumers

Change in Demand All factors that change demand and result in a new demand curve can increase or decrease demand When demand increases the curve shifts right When demand decreases the curve shifts left The demand curve never shifts up or down

Change in Demand

Demand Elasticity Demand Elasticity is the extent to which a change in price causes a change in the demand for a product Elastic Demand – change in price creates a large change in demand Inelastic Demand – change in price does not affect demand in a significant way

Demand Elasticity Can the purchase be delayed? If the purchase can be delayed the product is generally elastic Are adequate substitutes available? When substitutes are available the product is generally elastic Does the purchase use a large portion of income? When larger purchases are concerned, products are very elastic