1. (Demand Shifters)

2. What is a change in demand? Any change that alters the quantity demanded at every price. A shift in the demand curve, either to the left or right. Increase Right-----Decrease Left IRDL the Turtle

3. Shifts in the Demand Curve Price of Ice-Cream Cone Quantity of Ice-Cream Cones Increase in demand Decrease in demand D 2 DD 1 0

4. Demand Shifters: Tastes & Preferences of Consumers Income of Consumers Related Goods: Substitutes & Complements Expectations of Future Price Changes Size of population/Market

5. Tastes & Preferences of Consumers As people’s tastes change in favor of a good, or an effective advertising campaign has been waged, demand increases (shifts to the right). As people’s tastes change against a good, or a good loses popularity, demand decreases (shifts to the left). P Q D D1D1 P Q D1D1 D

6. Example: When Michael Jordan began endorsing the products, demand for Nike & Gatorade increased.

7. Income of Consumers As income increases, consumer demand for goods and services increases (shifts to the right). As income decreases, consumer demand for goods and services decreases (shifts to the left).

8. Example: When Billy got laid off from his job, his demand for gourmet steak dinners decreased.

9. Related Goods: Substitutes If two goods are SUBSTITUTES, when the price of Good A increases, demand for Good B increases (shifts to the right). If two goods are SUBSTITUTES, when the price of Good A decreases, demand for Good B decreases (shifts to the left). Substitute goods can be easily used in place of one another.

10. Example: Demand for Starbucks changes when Caribou alters its prices

11. Related Goods: Complements If two goods are COMPLEMENTS, when the price of Good A increases, demand for Good B decreases (shifts to the left). If two goods are COMPLEMENTS, when the price of Good A decreases, demand for Good B increases (shifts to the right). Complementary goods are used WITH each other.

12. Example: Demand for ketchup changes when hamburger prices fluctuate

13. Substitute OR Complementary? Cars and Tires Corn and Beans DVD Players and DVD’s Natural Gas and Electricity Cereal and Milk Toast and Jam Sweatshirts and Sweaters

14. Expectations of Future Price Changes If consumers expect the price of a good to rise in the future, immediate demand increases (shifts to the right). If consumers expect the price of a good to decrease in the future, immediate demand decreases (shifts to the left).

15. Example: Demand for gas changes throughout the week

16. Size of Population/Market As the number of consumers in a given market increases, demand increases (shifts to the right). As the number of consumers in a given market decreases, demand decreases (shifts to the left).

17. Example: Demand for girl scout patches increases when more girls join girl scouts

18. Variables That Influence Buyers