Date: March 17, 2014 Topic: Shifts in Demand Aim: Why do shifts in demand occur? Do Now: Multiple Choice Questions.

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Several factors can lead to a Shift in Demand …..

Several factors can lead to a Change in Demand …..

Shift in Demand or Change in Demand

If income increases, we will buy more goods at every price level. Consumers demand More of these goods when income increases #1 An increase in income causes demand for these goods to fall

Expectations about the future can affect our demand for certain goods today. #2

-Changes in the size of the population affect the demand for most products. -A growing population needs to be housed and fed. - Increase in population will increase demand for houses, food, and many other goods and services. #3

° World War II veterans return during the mid to late 1940’s ° Many of these men married and started families causing a BABY BOOM! ° The birthrate exploded between 1945 and ° This created higher demands for baby clothes, baby food, books, and baby care. ° Eventually, the BABY BOOM led to an increased demand for Primary schools, high schools, and universities (dorms too!)

#4 Advertising is a factor that shifts demand curves, it is important to social trends. Companies spend money on ads hoping to increase demand.

Test Your Shift Skills Suppose that you have had your eye on a new bicycle for several months now as a birthday present for your little brother or sister. One day you walk in the store to look as the bike, and the salesperson mentions that the store will be raising the price in one week. Because of this change in price your more likely to buy the bike today. What causes this? CONSUMER EXPECTATIONS

Test Your Shift Skills The country is beginning to see a generation of individuals retire. Over the next few decades the market will face rising demand for the goods and services that are desired by senior citizens, including medical care, recreational vehicles, and homes in the Sunbelt. What causes this? POPULATION

Test Your Shift Skills Your watching the Super Bowl with your friends because the commercials are always better than the game. All of a sudden you see your favorite musician(s) test driving a new fuel efficient sports car. You notice the price is not that expensive. You make a mental note of the car to later tell your parents that that's car you want! What causes this? INCOME

Test Your Shift Skills Somebody at your job just got fired. With no time to hire someone new for the busy next two weeks, your manager tells you he/she will give you an extra added bonus of $60. Your’re thrilled with the news because you wanted to save up, buy an Apple iPhone and tell everyone to call you when you’re in Economics class to make Mr. McHugh crazy. What causes this ? INCOME

The demand curve for one good can be affected by a change in the demand for another good. Complements:Complements: Two goods that are bought and used together Example: Skis, Ski boots Substitutes:Substitutes: Goods used in place of one another Example: Ski to Snowboards

Result of a change in price… Result of some other factor other than a change in price….

SUMMARY: Why do shifts in demand occur?