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```Economics Unit 4, Lesson 1
Demand
Change in QD
or
Change in D
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.
Change in Quantity
Demanded
A change in quantity demanded is caused
by a change in price. This is the only
reason for a change in quantity demanded.
P
D
P1
Q1
Q
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.
P
P2
P1
D
Q2
 QD
Q1
Q
Change in Demand
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The original demand curve is no longer valid.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.
The entire demand curve shifts.
Increase in Demand
P
D1
Q
The entire demand curve shifts.
Increase in Demand
P
D1
D2
Q
Shift Right
The entire demand curve shifts.
Increase in Demand
P
Decrease in Demand
P
D1
D2
Q
Shift Right
D1
Q
The entire demand curve shifts.
Increase in Demand
P
Decrease in Demand
P
D1
D2
D2
Q
Shift Right
D1
Q
Shift Left
Five Reasons for a Change in Demand
Five Reasons for a Change in Demand
1. Change in Consumer Taste or
Preference
Five Reasons for a Change in Demand
1. Change in Consumer Taste or
Preference
Includes advertising, news reports, trends, etc.
Five Reasons for a Change in Demand
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
1. Change in Consumer Taste or
Preference
Includes advertising, news reports, trends, etc.
Or
If the good becomes unpopular, the curve will:
Shift Left
Five Reasons for a Change in Demand
2. Change in Consumer Income
Five Reasons for a Change in Demand
2. Change in Consumer Income
Income
Demand
Income
Demand
at each and every price level
Shift Right
at each and every price level
Shift Left
(if the good is a normal good)
Five Reasons for a Change in Demand
3. Change in Market Size or Number
of Buyers or Groups Within the
Population
Five Reasons for a Change in Demand
3. Change in Market Size or Number
of Buyers or Groups Within the
Population
Market Size
Market Size
Demand
Shift Right
Demand
Shift Left
Five Reasons for a Change in Demand
4. Change in Consumer Expectations
Five Reasons for a Change in Demand
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
5. Change in Price of Related Goods
There are two types of related goods.
Five Reasons for a Change in Demand
5. Change in Price of Related Goods
A. Substitute - can use one good in place of
another
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?
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
.
Five Reasons for a Change in Demand
5. Price of Related Goods
B. Complement - one good used with
another good
Five Reasons for a Change in Demand
5. Price of Related Goods
B. Complement - one good used with another
good
Price of milk ,
Five Reasons for a Change in Demand
5. Price of Related Goods
B. Complement - one good needed to use
another good
Price of milk ,
Shift Left
.
Five Reasons for a Change in Demand
reasons.
TIMER
•
•
•
•
•
T = Change in consumer Taste
I = Change in consumer Income
M = Change in Market Size or # of buyers
E = Change in consumer Expectations
R = Change in price of Related Goods