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A Shift In The Demand Curve

A Shift In The Demand Curve. Focus Activity. How do you think you would show (using the Demand Curve) an increase in the Demand for a good?. P. D2. D. 0. Q. Ceteris Paribus. Ceteris paribus is a Latin phrase economists use meaning “all other things held constant.”

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A Shift In The Demand Curve

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  1. A Shift In The Demand Curve

  2. Focus Activity How do you think you would show (using the Demand Curve)anincrease in the Demand for a good? P D2 D 0 Q

  3. Ceteris Paribus • Ceteris paribus is a Latin phrase economists use meaning “all other things held constant.” • A demand curve is accurate only as long as the ceteris paribus assumption is true. • When the ceteris paribus assumption is dropped, movement no longer occurs along the demand curve. Rather, the entire demand curve shifts.

  4. The Demand Curve P Movement along the DemandCurve means that the Price haschanged P2 P1 D Q 0 Q2 Q1

  5. The Demand Curve P If it shifts to the Right what has happened? Demand has Increased D1 D 0 Q

  6. The Demand Curve What does a shift to the left mean? P Demand has Decreased… “LEFT IS LESS!” D D1 0 Q

  7. Factors that Cause Shifts • 1. Income • Changes in consumers incomes affect demand. • A normal good is a good that consumers demand more of when their incomes increase. • An inferior good is a good that consumers demand less of when their income increases.

  8. Factors that Cause Shifts • 2. Consumer Expectations • Whether or not we expect a good to increase or decrease in price in the future greatly affects our demand for that good today. • Example: Anticipation of Sales

  9. Factors that Cause Shifts • 3. Population • Changes in the size of the population also affects the demand for most products.

  10. Factors that Cause Shifts • 4. Consumer Tastes and Advertising • Advertising plays an important role in many trends and therefore influences demand.

  11. Prices of Related Goods • Prices of Related Goods • The demand curve for one good can be affected by a change in the price for another good. • Complements are two goods that are bought and used together. Example: skis and ski boots • Substitutes are goods used in place of one another. Example: skis and snowboards

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