2. Changes in Quantity Demanded Change in the quantity demanded
due to a PRICE change occurs ALONG the demand curve Demand Curve
for Widgets At $3 per Widget, the Quantity demanded of widgets is
6. $6 An increase in the Price of $5 Widgets from $3 to $4 will
lead to a decrease in the Quantity Demanded of Widgets from 6 to 4.
$4Price per Widget $3 Demand Curve for Widgets $2 $1 $0 0 2
4Quantity Demanded of Widgets8 6 10 12
3. Changes in DemandChanges in any of the factors other than
price of the item causes the demand curve to shift either: Decrease
in Demand shifts to the Left (Less demanded at each price) OR
Increase in Demand shifts to the Right (More demanded at each
price)
4. Changes in Demand Demand CurveDemand Increase in for Widgets
Several factors will change the demand for $6 $6 the good (shift
the entire demand curve) As an example, suppose $5 $5 consumer
income increases. The demand for Widgets at all prices will
increase. $4 $4Price per WidgetPrice per Widget $3 $3 Orginal
Demand Curve Demand Curve for Widgets New Demand Curve $2 $2 $1 $1
$0 $0 00 2 2 4 4 6 6 8 8 10 10 12 12 14 Quantity Demanded ofof
Widets Quantity Demanded Widgets
5. Changes in Demand Demand Curve for Widgets Decrease in
Demand Demand will also decrease due to changes $6 in factors other
than price. As an example, suppose $5 Widgets become less popular
to own. $4Price per Widget $3 Original Demand Curve Demand Curve
for Widgets New Demand Curve $2 $1 $0 0 22 44 6 6 8 8 10 10 12 12
Quantity Demanded of Widgets Quantity Demanded of Widgets
6. Changes in DemandThe ENTIRE Demand Curve can SHIFT to the
LEFT (less) or RIGHT (more) inresponse to the following factors:1.
Income: changes in consumers income For example, you get a job and
have more money so you demand more clothes or movie tickets.
(Demand curve shifts RIGHT)2. #of Consumers: changes in the number
of consumers For example, Many tourist come to town in the summer
and the demand for ice cream goes up at all prices.(Right) In the
winter demand goes down at all prices. (Left)3. Tastes and
Preferences: changes in preference or popularity ofproduct/service
For example, everyone starts eating FroYo instead of ice cream so
the demand for ice cream goes down at all prices.(Left)4.
Expectations: changes in what consumers expect to happen in
thefuture For Example, everyone expects a hurricane to hit, so the
demand for bottled water and batteries goes up at every price.
(Right)
7. Changes in DemandPrices of related goods also affect demand
5. Substitute goods when a substitute is a product that can be used
in the place of another. The price of the substitute good and
demand for the other good are directly related For example, if the
price of Coke goes up, the Demand for Pepsi goes up People will buy
Pepsi instead if Coke prices are high (Shift in Pepsi curve to
Right) 6. Complementary goods a complement is a good that goes well
with another good. When goods are complements, there is an inverse
relationship between the price of one and the demand for the other
For example, Price of Peanut Butter goes up, the demand for Jelly
goes down If the price of peanut butter goes way up, people will
buy less peanut butter, but they will also buy less Jelly at every
price (Shift in Jelly curve to Left)