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Shifts in the Demand Curve

Shifts in the Demand Curve. Chapter 4 Section 2. Ceteris Paribus. All things held constant Demand schedules only take the price into account News reports Weather feelings. When we drop ceteris paribus The changes no longer move along the curve The changes no shift the entire curve.

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Shifts in the Demand Curve

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  1. Shifts in the Demand Curve Chapter 4 Section 2

  2. Ceteris Paribus • All things held constant • Demand schedules only take the price into account • News reports • Weather • feelings

  3. When we drop ceteris paribus • The changes no longer move along the curve • The changes no shift the entire curve

  4. What causes a shift? • Income • Most items we purchase are normal goods • Goods that we demand more of when your income increases • Inferior Goods • Good that consumers demand less of when their income increase • Mac and cheese, used cars, generic cereals

  5. What causes a shift? • Consumer Expectations • Your told that a good is going to go up in price the next day or week

  6. Consumer Expectations • You know a product is going on sale next week

  7. Your current demand for a good is positively related to its expected future price

  8. Population • A rise in population will increase the need for housing, food, and other services • Baby boomers home from war

  9. Consumer tastes and advertising • Companies spend money on advertising because they hope that it will increase the demand for the goods they sell • Movies, games and internet

  10. Related goods • Complements – goods that are bought and used together • Golf clubs – golf balls, shoes, tees and bag • Substitutes – goods used in place of one another • Skis – snowboard, saucer, sled, and toboggan

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