What am I Learning Today?

How and Why a Demand Curve Shifts.How Will I Show I Know It? A Worksheet to practice with.

A Term I Must Know

• ceteris paribus- literally translated as "with other things the same,"

What is the difference between change along the demand curve and a shift in demand?

Moving Along the Curve Looks Like This:

How do I put this in simple terms:

• Moving on the demand curve only deals with the price change.

• As the price changes, the quantity demand changes

Now To Add Something New: A Shift in the Curve

How I Do I Define This New Idea of A Shift in the Demand Curve

This is a picture

The Definition

• A shift in the demand curve means at every price consumers will buy a different quantity than before.

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• Demand changed due to other factors than price.

• Example: A massive cold snap hits Atlanta. I might not want to buy as many shakes from Brewsters. My demand for Brewster’s Ice Cream has changed, but their prices had no impact on why I changed my habit of buying a milk shake.

What Non Price Factors Can Move A Demand Curve?

• Income• Consumer Expectations• Population • Consumer Tastes• Prices of Related Goods

Income

• You buy things when you have money and don’t when you have none.

• There are two types of items that we buy.

Two Item TypesNormal Good

• It is what we buy when we have more money.• Example:• Designer Clothes• Expensive Car• Name brand groceries

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Inferior Good

• What you buy when you have less money.• Instead of name brand cereal, you buy then

bags of generic cereal.• Instead of Dr. Pepper, you by Dr. Thunder• Instead of a new car, you buy a used car.

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Normal vs Inferior Good

Normal• New Car• Sugar Puffs• Dr. Pepper• Steak Dinner

Inferior• Used Car• Generic Wheat Puffs• Dr. Thunder• Romaine Noodles in a cup

Consumer Expectations

• What someone thinks can happen in the future.

• Salesperson mentions prices may go up.• An item may go on sale. You might not buy

something until it goes on sale.

Population

• As the number of people in an area increases, so does demand

Consumer Tastes

• Fads and Fashions

Prices of Related Goods Can Cause One Curve to Shift Another Products Curve

Compliments

• Two Goods that are bought and used together.• Paint and paintbrush• Toothbrush and toothpaste• Ipod and earphones• Peanut Butter and jelly

Substitutes

• Goods that can be used in place of another• The price of coffee goes up, people will buy

more tea.• Price of movies go up, people may watch

more DVDs

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