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Economics 4-2
Factors Affecting
Demand
Economics 4-2
Factors Affecting Demand
ESSENTIAL QUESTION:
What factors might cause
demand to either increase or
decrease?
Economics 4-2
Factors Affecting Demand
GPS STANDARDS:
SSEMI3a.) Identify and illustrate on a graph factors that cause
changes in market supply and demand.
Factors Affecting Demand
•
The demand
curve is a
graphical
representation
of the
quantities that
people are
willing to
purchase at all
possible
prices that
might prevail
in the market.
Figure 4.1
The Demand for Compact Discs
Factors Affecting Demand
•
There are a
number of
factors that
will cause
demand to
either
increase or
decrease.
Figure 4.1
The Demand for Compact Discs
Factors Affecting Demand
•
These
changes are
usually of two
types:
1. a change in
the quantity
demanded
2.
and a change
in demand.
Figure 4.1
The Demand for Compact Discs
Factors Affecting Demand
•
The change in
quantity demanded
shows a change in
the amount of the
product purchased
when there is a
change in price.
Figure 4.3
A Change in Quantity Demanded
Factors Affecting Demand
•
The income
effect means
that as prices
drop,
consumers
are left with
extra real
income.
Figure 4.3
A Change in Quantity Demanded
Factors Affecting Demand
•
The substitution
effect means
that price can
cause
consumers to
substitute one
product with
another similar
but cheaper
item.
Figure 4.3
A Change in Quantity Demanded
Factors Affecting Demand
•
A change in
demand is
when people
buy different
amounts of the
product at the
same prices.
Figure 4.4
A Change in Demand
Factors Affecting Demand
•
A change in
demand can be
caused by a
change in
income, tastes,
a price change
in a related
product (either
because it is a
substitute or
complement),
consumer
expectations,
and the number
of buyers.
Figure 4.4
A Change in Demand