Shifts in the Demand Curve Objectives: Explain the difference between change in quantity demanded and change in demand Identify demand shifter variables that cause changes in demand

Change in Demand or Change in Quantity Demanded What affects demand? – Price or….? Demand Shifters/Non-price determinants – Number of buyers – Tastes – Income – Expectations – Price of related goods

Change in Quantity Demanded Change in quantity demanded – Movement between points along a demand curve – Results solely from a change in price – Based on assumption that all other demand shifter factors remain constant

Change in Quantity Demanded

Change in Demand Change in demand – Increase (rightward shift) or decrease (leftward shift) in the demand curve – Result of change in one of the five demand shifter factors

Change in Demand

Summary Use your notes and knowledge to complete the classwork.

Summary ChangeEffectDescription Price IncreasesUpward movement along the demand curve Decrease in the quantity demanded Price DecreasesDownward movement along the demand curve Increase in the quantity demanded Demand Shifter FactorsLeftward or rightward shift in the demand curve Decrease or increase in demand

Demand Shifter Factors What affects quantity demanded? – Number of Buyers – Tastes – Income Income Normal good Inferior good – Expectations of Buyers – Price of Related Goods Price of Related Goods Substitutes Complements

Demand Shifter Factors: Income Normal Good – Any good for which there is a direct relationship between changes in income and its demand curve Income increases  demand increases Income decreases  demand decreases Inferior Good – Any good for which there is an inverse relationship between changes in income and its demand curve

Demand Shifter Factors: Prices of Related Goods Substitutes – Goods that compete for consumer purchases Pepsi-Cola & Coca-Cola Direct relationship between a price change for one good and the demand for its “competitor” good Complements – Goods that consumers purchase together with another good Printers and ink cartridges Inverse relationship between a price change for one good and the demand for its “go together” good.

Handouts Demand Shifter Factors with Real-World Examples Demand Homework #2 – Complete through #7