Download Change in Quantity Demanded or Change in Demand

Economics Unit 4, Lesson 1
Demand
Change in QD
or
Change in D
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Objectives
1.
2.
3.
Understand the difference between a
change in demand and a change in
quantity demanded.
Identify the determinants of a change in
demand and quantity demanded.
Graph a change in D and QD.
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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.
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P
D
P1
Q1
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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.
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P
P2
P1
D
Q2
Q1
 QD
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Q
Change in Demand
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If one of the conditions changes the
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The original demand curve is no longer valid.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.
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The entire demand curve shifts.
Increase in Demand
P
D1
D2
Q
Shift Right
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The entire demand curve shifts.
Increase in Demand
P
Decrease in Demand
P
D1
D2
D1
Q
Q
Shift Right
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The entire demand curve shifts.
Increase in Demand
P
Decrease in Demand
P
D1
D2
D2
Q
Shift Left
Shift Right
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D1
Q
Five Reasons for a Change in Demand
Change in Consumer Taste or
Preference
2. Change in Consumer Income
3. Change in Market Size/# of Buyers
4. Changes in Consumer Expectations
About Price
5. Change in Price of Related Good(s)
1.
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Five Reasons for a Change in Demand
1. Change in Consumer Taste or
Preference
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Five Reasons for a Change in Demand
1. Change in Consumer Taste or
Preference
Includes advertising, news reports, trends, etc.
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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
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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
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Five Reasons for a Change in Demand
2. Change in Consumer Income
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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)
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Five Reasons for a Change in Demand
3. Change in Market Size or Number
of Buyers or Groups Within the
Population
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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
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Five Reasons for a Change in Demand
4. Change in Consumer Expectations
about Price
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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
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Five Reasons for a Change in Demand
5. Change in Price of Related Goods
There are two types of related goods.
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Five Reasons for a Change in Demand
5. Change in Price of Related Goods
A. Substitute - can use one good in place of another
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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?
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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
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.
Five Reasons for a Change in Demand
5. Price of Related Goods
B. Complement - one good used with
another good
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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?
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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
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.
Five Reasons for a Change in Demand –
This might help you remember these
reasons.
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
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