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4.2 Shifts of the Demand Curve

4.2 Shifts of the Demand Curve. Many factors besides price can change the demand for goods. Factors for Change. Price is one of many factors that can change the demand for goods Example: If it was discovered that tomato sauce was extremely good for your health, demand for pizza would rise

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4.2 Shifts of the Demand Curve

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  1. 4.2 Shifts of the Demand Curve Many factors besides price can change the demand for goods.

  2. Factors for Change • Price is one of many factors that can change the demand for goods • Example: If it was discovered that tomato sauce was extremely good for your health, demand for pizza would rise • Consumers would want to buy more pizza at all price levels; this increase in demand shifts the entire demand curve to the right • Likewise, if it was announced that sauce was unhealthy, people would buy less pizza at all price levels and the demand curve would shift to the left

  3. Continued • Other factors can shift the demand curve; for example, if your income rises, you might buy more pizza • Higher income causes people to buy more of most goods at every price level • This creates a shift to the right of the demand curve; similarly, a decrease in income causes demand for most goods to fall

  4. Continued • Changes in population will affect demand; for example, an increase in the number of senior citizens is likely to increase the demand for medical care • Advertising and fashion trends can also have a big effect on consumer demand (Example: Uggs, Got Milk?)

  5. Demand vs. Demand • The demand for one good can also affect the demand for other goods • Complements are two goods that are bought and used together; if you buy skis you will most likely buy ski boots to go with them • Substitutes are goods used in place of one another; when you buy a snowboard you will most likely buy fewer skis

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