Shifts in the Demand Curve Chapter 4 Section 2

Ceteris Paribus All things held constant – Demand schedules only take the price into account News reports Weather feelings

When we drop ceteris paribus – The changes no longer move along the curve – The changes no shift the entire curve

What causes a shift? Income – Most items we purchase are normal goods Goods that we demand more of when your income increases – Inferior Goods Good that consumers demand less of when their income increase – Mac and cheese, used cars, generic cereals

What causes a shift? Consumer Expectations – Your told that a good is going to go up in price the next day or week

Consumer Expectations – You know a product is going on sale next week

Your current demand for a good is positively related to its expected future price

Population – A rise in population will increase the need for housing, food, and other services – Baby boomers home from war Marriage Services Clothing Educational Products

Consumer tastes and advertising – Companies spend money on advertising because they hope that it will increase the demand for the goods they sell Movies, games and internet

Related goods – Complements – goods that are bought and used together Golf clubs – golf balls, shoes, tees and bag – Substitutes – goods used in place of one another Skis – snowboard, saucer, sled, and toboggan