Download Determinants of Demand

Determinants of Demand Worksheet
Factors other than price cause demand to shift
Name: __________________
Directions: For each determinant of demand identify whether the newspaper headline will raise or lower
demand and whether there will be movement along the curve or movement of the curve.
1. Consumer tastes and Preferences: Diets Promote Low Car Craze (low carbohydrate food). What happens
to the demand for pasta (a high carb food)?
2. Consumer expectations: Microsoft Hiring 10,000 People in the Puget Sound Area. What will happen to
demand for Starbucks coffee?
3. Market Size: (potential buyers) changes in the size of the market. U.S. Signs Free Trade Agreement with
China. What happens to the demand for Boeing airplanes (a top U.S. export)?
4. Income: Average Income For Consumers Rises. What happens to demand for clothes?
5. Prices of complementary goods: Shirts and pants go together. Price of Shirts Hits All Time High. What
happens to the price of pants?
6. Prices of substitute goods: pants and skirts are substitute goods for women. If the price of one goes a
woman could substitute the other for it. Price of Skits Falls. What happens to the price of women’s
pants?
7. For two of the above determinants of demand, come up with your own headline and how each would
impact the related determinant(s) of demand.
Determinants of Demand
A
B
C
D
E
Beef Consumption in MAY
Read the following newspaper headlines. In each case decide if the event will cause a change in the demand for beef.
If so, determine if it is an increase or a decrease, and write the correct answer. Begin at curve C. If you think headline
1 means there will be a decrease in demand, write “decrease” in the first blank and “B” in the second blank; move to
curve B to do headline 2. Move only ONE curve at a time. If you are at A and the next headline implies a decrease in
demand, you goofed somewhere. There is one headline which implies that the demand for beef does not change.
1. PRICE OF BEEF TO RISE IN JUNE
DEMAND ____________ CURVE _______
2. MILLIONS OF ALIENS SWELL U.S. POPULATION
DEMAND_____________ CURVE _______
3. HAMBURGER BUN PRICES RISE
DEMAND _____________ CURVE _______
4. JAPAN ENDS BAN ON U.S. BEEF CAUSED BY MAD COW SCARE
DEMAND _____________ CURVE _______
5. SURGEON GENERAL WARNS THAT EATING BEEF CAN BE HAZERDOUS TO HEALTH
DEMAND _____________ CURVE _______
6. MIGRATORY BIRDS HEAD NORTH; SUMMER AWAITS
DEMAND ______________ CURVE _______
7. REAL INCOME FOR AMERICANS DROPS 3RD MONTH IN A ROW
DEMAND_______________ CURVE ______
8. CHARCOAL SHORTAGE THREATENS MEMORIAL DAY COOKOUTS
DEMAND _______________ CURVE _____
9. NATIONWIDE FAD: THE FURBIE-BUGER
DEMAND _______________ CURVE_____
1. Consumer tastes and Preferences: There is a sudden craze for low carb (carbohydrate) food. What
happens to the demand for pasta (a high carb food)?
- outward/upward shift in the demand curve – people will buy more of the good at any given price
2. Income: Unemployment drops, more people find work. What happens to demand for entertainment?
3. Prices of related goods: The price of ski tickets goes up, what would happen to demand for ski and snow
board equipment?
4. Consumer expectations: Microsoft announces that it is hiring 10,000 more people in the Puget Sound
area. What will happen to demand for Starbucks coffee?
5. Market Size: (potential buyers) changes in the size of the market
Example - U.S. signs free trade agreement with China. What happens to the demand for Boeing
airplanes (a top U.S. export)?
.
Consumer tastes and Preferences: There is a sudden craze for low carb food. What happens to the demand for Atkins
diet products (low carb foods)?
2. Income: Unemployment drops, more people find work. What happens to demand for entertainment?
- outward/upward shift in the demand curve – people will buy more of the good at any given price
3. Prices of related goods: The price of ski tickets goes up, what would happen to demand for ski and snow board
equipment?
- downward/inward shift in the demand curve – people will less more of the good at any given price
4. Consumer expectations: People think that economy is going to start doing much better leading to higher
employment and thus higher wages. What will happen to their demand for clothes at any given price?
- outward/upward shift in the demand curve – people will buy more of the good at any given price
5. Market Size: (potential buyers) changes in the size of the market
Example - Company moving to a national advertising campaign. What would happen to demand for the good
at any given price?
- outward/upward shift in the demand curve – there are more people able to buy the good at any given price
Example - U.S. places an embargo – Cuba, N. Korea. We cannot sell our wheat to either country. What
happens to the quantity demanded of wheat at any given price?
- downward/inward shift in the demand curve – there are less people able to buy the good at any given price
1. PRICE OF BEEF TO RISE IN JUNE
DEMAND increase CURVE D
2. MILLIONS OF ALIENS SWELL U.S. POPULATION
DEMANDincrase CURVE
E
3. HAMBURGER BUN PRICES RISE
DEMAND decrease CURVE D
4. JAPAN ENDS BAN ON U.S. BEEF CAUSED BY MAD COW SCARE
DEMAND increase CURVE
E
5. SURGEON GENERAL WARNS THAT EATING BEEF CAN BE HAZERDOUS TO HEALTH
DEMAND decrease CURVE D
6. MIGRATORY BIRDS HEAD NORTH; SUMMER AWAITS
DEMAND no change CURVE D
7. REAL INCOME FOR AMERICANS DROPS 3RD MONTH IN A ROW
DEMANDdecrease CURVE C
8. CHARCOAL SHORTAGE THREATENS MEMORIAL DAY COOKOUTS
DEMAND decrease CURVE B
9. NATIONWIDE FAD: THE FURBIE-BUGER
DEMAND decrease CURVE A