Change In the Quantity Demanded The change in quantity demanded shows a change in the amount of a product purchased when there is CHANGE in price. This is illustrated by movement ALONG the demand curve.

Change In the Quantity Demanded

A change in quantity demanded can occur because of: Income Effect - As the price of a product drops, consumers are left with extra real income. If they feel "richer," they may purchase more. However the opposite is true if the price increases.

Change In the Quantity Demanded Substitution Effect - Price can cause consumers to "substitute" one product for another cheaper item. If the relative price of a product changes, consumers may feel inclined to choose the cheaper product. KEY: THE DEMAND CURVE DOES NOT SHIFT

Changes In Demand A change in demand is when people buy different amounts of a product at the SAME price. A Change in Demand creates a NEW curve. In this case, the demand curve itself moves-  Right = Increase in Demand  Left = Decrease in Demand

Changes In Demand

A Change in Demand can be caused by: Change in Income - When income goes up, consumers are able to buy more and vice versa. If income goes up the curve will shift to the right. If income goes down or is lost, then the curve will shift to the left. Change in Consumer Tastes - If people like a product, they will buy more of it and vice versa. Question: What happens to the demand curve in this situation?

Changes In Demand Price Change in a Related Product-  Substitutes - Some products can be used in substitution of another. If the price goes up with 1 product, the demand of its substitute will increase. The opposite is also true.  Complements - Some products complement each other. Therefore, an increase in price of one good will lower the demand of the complement.

Changes In Demand Consumer Expectation - Future expectations might cause consumers to either purchase items immediately or delay. Number of Consumers - An increase will cause a shift to the right and a decrease will cause a shift to the left.