Download Shifts of the demand curve

Understand the factors that cause in increase/decrease in
consumers’ demand of a good at all price points
 An event that
increases/decreases
demand reflecting a
rise/drop in the
quantity demanded
at any given price
 T—consumer tastes
 I—consumer income
 R—price of related goods/services
 E—consumer expectations of future prices
 S—size of consumer market
 3rd variables to our graphic representation of price and quantity demanded!
 Can result in an increase or decrease of demand
Normal vs. Inferior goods
• Normal good consumption (thus,
demand) increases with a larger
income
• Inferior good consumption (thus,
demand) decreases with a larger
income
If you were given $1 million right
now, what would you buy?
Vs.
Substitutes vs. Compliments
 If the rise in price of one
good drives consumers to
purchase an alternative
good, they are said to be
substitutes
 If the fall in the price of
one good drives
consumers to purchase
more of another good,
they are said to be
compliments
 If outlook is a drop in price, demand will decrease today
 If outlook is an increase in price, demand will increase today