1. Get handout from the table & complete as quickly & quietly as possible.
Get your notebooks out.
Have pen/pencil ready!

2. Change in Demand

3. The only change we have discussed . . .
Until this point has been a change in price.
Change in price causes a change in ________.
Though price stays the same, there are things that can cause a change in the Quantity Demanded.
When price stays the same and the quantity demanded changes due to other factors, economists say that we have a change in demand.

4. How is change in demand graphed?
This is referred to as a shift in demand or an increase in demand and is labeled D1.
When price stays the same and something else happens, the amount demanded may increase. An increase in demand would be graphed like this . . .
$20
Previously at $20, none of the items were demanded. Now due to something other than a change in price, 200 of these items are demanded at the same price of $20. Previously at $10, 100 were demanded; now 300 are demanded at the same price of $10; etc. Note: Price stayed the same.
$10
Price $5 D D1
100
200
300
400
Quantity Demanded

5. Determinants of Demand
There are 6 things that can cause a change (or shift) in demand when price stays the same:
Change in Consumers’ Income
Change in number of Consumers
Change in price of a substitute good.
Change in consumers’ expectations.
Change in price of a complementary good.
Change in consumers’ tastes & preferences.
INSECT

6. What can cause an increase in Demand?
Increase in consumers’ incomes.
Increase in number of consumers.
Increase in price of a substitute good.
Change in consumers’ expectations.
Decrease in price of a complementary good.
Change in consumers’ tastes & preferences.

7. What can cause an increase in Demand?
Increase in consumers’ incomes.
Increase in number of consumers.
Increase in price of a substitute good.
Change in consumers’ expectations.
Decrease in price of a complementary good.
Change in consumers’ tastes & preferences.

8. Give me scenarios, Ms. Squires!
Increase in Income
Pres. Obama has announced that he is cutting income tax withholdings from paychecks for all United States citizens by 50% beginning with the next pay period!
Consumers feel richer and demand more of items at the same prices simply because they have more money due to the tax cut.

9. Give me scenarios, Ms. Squires!
Increase No. of Consumers
Millions of people immigrate to the United States from China!
The amount demanded at the same prices increases simply because there are so many more people living in the United States. An increase in demand (shift to the right) occurs.

10. Give me scenarios, Ms. Squires!
Increase No. of Consumers
Millions of people immigrate to the United States from China!
The amount demanded at the same prices increases simply because there are so many more people living in the United States. An increase in demand (shift to the right) occurs.

11. Give me scenarios, Ms. Squires!
Change in Price of a
Substitute Good
Substitute good is one that can be used in place of another good. Examples: Butter/Margarine; Tide laundry determine/Sun laundry detergent. Polo jeans/Faded Glory jeans.
The price for Faded Glory jeans increases. Demand for Polo jeans increases though the price stayed the same. The price of the substitute good changed! An increase in demand (shift to the right) occurs.

12. Increase in Price of Substitute Good
Demand Curve for Polo Jeans
Demand Curve for Faded Glory Jeans
The price for polo jeans did not change – it remained the same. Due to change in price of substitute (Faded Glory), people are demanding more at same prices.
Price of Faded Glory jeans increased from $5 to $20 per pair.

13. Change in Consumer Expectations
Demand for Beef in October
Newspaper headline: “Price of beef expected to double in November!” It is now October.
The amount demanded at the same prices increases simply because people expect the price to go up in Nov. It is now Oct. They will freeze beef! An increase in demand (shift to the right) occurs.

14. What’s a complementary Good
A good that one usually buys when another item is bought. Examples:
Peanut butter & jelly
Hamburger meat & hamburger buns
DVD players & DVDs
Computers & computer software

15. Decrease in Price of a Complementary Good
Demand Curve for DVDs.
Demand Curve for DVD Players
The price for DVDs did not change – it remained the same. Due to change in price of a complementary (DVD players), people are demanding more DVDs at same prices.
Price of DVD players decreased from $20 to $5.

16. Change in Consumers Tastes & Preferences
Bell Bottom Jeans
All teen fashion magazines show models wearing bell bottom jeans.
Price of bell bottom jeans did not change! The amount demanded at the same prices increases simply because teenagers now like and feel they must have bell bottom jeans. An increase in demand (shift to the right) occurs.

17. If the price for an item increases, demand for its substitutes
Decreases
There is no way to tell
Is unaffected.

18. When the income in houses increases, what is the most likely result?
The demand curve shifts to the right.
The demand curve shifts to the left.
There is no change in the demand curve.
Movement occurs along the demand curve.