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Shift Demand Ch. 4.2

This article delves into the concept of shift in demand within economic theory. It explains how the demand curve shifts right when quantity demanded increases and vice versa. Key factors affecting demand include consumer income (normal and inferior goods), expectations about future prices, population changes, consumer tastes influenced by advertising, and prices of related goods (complements and substitutes). Real-world examples illustrate these concepts, highlighting their relevance in everyday purchasing behavior.

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Shift Demand Ch. 4.2

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  1. ShiftDemandCh. 4.2 By Lauren Cantu

  2. What it is • Refers to a shift in the demand curve • When the quantity demanded increases, curve moves right (vice versa) • Happens when ceteris paribus is dropped • “all other things (besides price) held constant”

  3. What causes it • Income • Normal goods: Goods that consumers demand more of when their income increases. • Ex: new car vs. used car • Inferior goods: when income increases, demand for these goods fall (you can afford something better) • Ex: mac & cheese, generic cereals, used cars

  4. What causes it • Consumer Expectations • If price is expected to increase in the future, there will be an immediate increase in demand. (vice versa) • Ex: sales • Population • Ex: WWII, Baby Boomers • Consumer tastes/Advertising • Campaigns, social trends, media influences

  5. What causes it • Prices of Related Goods • Complements: two goods that are bought and used together • Ex: skis and ski boots • Substitutes: goods used in place of another • Ex: Snowboards and skis

  6. Real World • Historically and currently, when gas prices have been predicted to rise, consumers will flock to gas stations before the prices rise (increase in demand)

  7. VideoExample • http://www.youtube.com/watch?NR=1&v=DigiWS1YhxI&feature=fvwp

  8. Assessment True or False? • Shift Demand refers to the shift in demand curve. • A new car is an inferior good. • The curve will shift right if there’s an decrease in demand. • Substitutes are goods used in place of another. • Population is a factor that can cause shift.

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