demand change in qd or change in d ©2012, tesccc economics unit 4, lesson 1
TRANSCRIPT
Demand
Change in QD
or
Change in D
©2012, TESCCC
Economics Unit 4, Lesson 1
Objectives
1. Understand the difference between a change in demand and a change in quantity demanded.
2. Identify the determinants of a change in demand and quantity demanded.
3. Graph a change in D and QD.
©2012, TESCCC
Change in Quantity
DemandedA change in quantity demanded is caused
by a change in price. This is the only reason for a change in quantity demanded.
©2012, TESCCC
P
Q
P1
Q1
D
©2012, TESCCC
Change in Quantity Demanded
Since the demand curve shows the quantity demanded at all prices if price is the only thing that changes, then our demand curve is still valid and we can show this change by simply moving along the demand curve.
©2012, TESCCC
P
Q
P1
Q2 Q1
P2
D
QD©2012, TESCCC
Change in Demand
©2012, TESCCC
If one of the conditions changes, willingness or financial ability of people to buy different amounts of goods and services, we see a change in demand at each and every price level.
The original demand curve is no longer valid. We must have a new demand curve. This is called a shift of the demand curve.
©2012, TESCCC
The entire demand curve shifts.
Increase in Demand
D1
P
Q
©2012, TESCCC
D1D2
The entire demand curve shifts.
Increase in Demand
P
Q
Shift Right©2012, TESCCC
The entire demand curve shifts.
Increase in Demand Decrease in Demand
D1 D2 D1
P
Q
P
QShift Right
©2012, TESCCC
D2
The entire demand curve shifts.
Increase in Demand Decrease in Demand
D1 D2 D1
P
Q
P
QShift LeftShift Right
©2012, TESCCC
Five Reasons for a Change in Demand
©2012, TESCCC
Five Reasons for a Change in Demand
1. Change in Consumer Taste or Preference
©2012, TESCCC
1. Change in Consumer Taste or Preference
Includes advertising, news reports, trends, etc.
Five Reasons for a Change in Demand
©2012, TESCCC
1. Change in Consumer Taste or Preference
Includes advertising, news reports, trends, etc.
The good becomes more popular, so the curve:
Shifts Right
Five Reasons for a Change in Demand
©2012, TESCCC
1. Change in Consumer Taste or Preference
Includes advertising, news reports, trends, etc.
OrIf the good becomes unpopular, the curve will:
Shift Left
Five Reasons for a Change in Demand
©2012, TESCCC
Five Reasons for a Change in Demand
2. Change in Consumer Income
©2012, TESCCC
Five Reasons for a Change in Demand
2. Change in Consumer Income
Income Demand at each and every price level
Shift Right
Income Demand at each and every price level
Shift Left
(if the good is a normal good)©2012, TESCCC
3. Change in Market Size or Number of Buyers or Groups Within the
Population
Five Reasons for a Change in Demand
©2012, TESCCC
3. Change in Market Size or Number of Buyers or Groups Within the
Population
Market Size Demand Shift Right
Market Size Demand Shift Left
Five Reasons for a Change in Demand
©2012, TESCCC
4. Change in Consumer Expectations about Price
Five Reasons for a Change in Demand
©2012, TESCCC
4. Change in Consumer Expectations
If buyers think price will go up in the future,
then demand now
Shift Right
If buyers think price will go down in the future,
then demand now
Shift Left
Five Reasons for a Change in Demand
©2012, TESCCC
Five Reasons for a Change in Demand
5. Change in Price of Related Goods
There are two types of related goods.
©2012, TESCCC
Five Reasons for a Change in Demand
5. Change in Price of Related Goods
A. Substitute - can use one good in place of another
©2012, TESCCC
Five Reasons for a Change in Demand
5. Price of Related Goods
A. Substitute - can use one good in place of another
Price of butter ,then demand for margarine?
©2012, TESCCC
Five Reasons for a Change in Demand
5. Price of Related Goods
A. Substitute - can use one good in place of another
Price of butter ,then demand for margarine .
Shift Right
©2012, TESCCC
Five Reasons for a Change in Demand
5. Price of Related Goods
B. Complement - one good used with
another good
©2012, TESCCC
Five Reasons for a Change in Demand
5. Price of Related Goods
B. Complement - one good used with another good
Price of milk ,then the demand for cookies?
©2012, TESCCC
Five Reasons for a Change in Demand
5. Price of Related Goods
B. Complement - one good needed to use another good
Price of milk ,then the demand for cookies .
Shift Left
©2012, TESCCC
TIMER
• Change in consumer Taste
• Change in consumer Income
• Change in Market Size or buyers
• Change in consumer Expectations
• Change in price of Related Goods
Five Reasons for a Change in Demand – This might help you remember these
reasons.
©2012, TESCCC