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Shifts in the Demand Curve

Shifts in the Demand Curve. Objectives: Explain the difference between change in quantity demanded and change in demand Identify demand shifter variables that cause changes in demand. Change in Demand or Change in Quantity Demanded . What affects demand? Price or….?

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Shifts in the Demand Curve

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  1. Shifts in the Demand Curve Objectives: Explain the difference between change in quantity demanded and change in demand Identify demand shifter variables that cause changes in demand

  2. Change in Demand or Change in Quantity Demanded • What affects demand? • Price or….? • Demand Shifters/Non-price determinants • Number of buyers • Tastes • Income • Expectations • Price of related goods

  3. Change in Quantity Demanded • Change in quantity demanded • Movement between points along a demand curve • Results solely from a change in price • Based on assumption that all other demand shifter factors remain constant

  4. Change in Quantity Demanded

  5. Change in Demand • Change in demand • Increase (rightward shift) or decrease (leftward shift) in the demand curve • Result of change in one of the five demand shifter factors

  6. Change in Demand

  7. Summary • Use your notes and knowledge to complete the classwork.

  8. Summary

  9. Demand Shifter Factors • What affects quantity demanded? • Number of Buyers • Tastes • Income • Normal good • Inferior good • Expectations of Buyers • Price of Related Goods • Substitutes • Complements

  10. Demand Shifter Factors: Income • Normal Good • Any good for which there is a direct relationship between changes in income and its demand curve • Income increases  demand increases • Income decreases  demand decreases • Inferior Good • Any good for which there is an inverse relationship between changes in income and its demand curve

  11. Demand Shifter Factors: Prices of Related Goods • Substitutes • Goods that compete for consumer purchases • Pepsi-Cola & Coca-Cola • Direct relationship between a price change for one good and the demand for its “competitor” good • Complements • Goods that consumers purchase together with another good • Printers and ink cartridges • Inverse relationship between a price change for one good and the demand for its “go together” good.

  12. Handouts • Demand Shifter Factors with Real-World Examples • Demand Homework #2 • Complete through #7

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