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Chaper 4-2, Shifts of the Demand Curve

Several factors can change the demand for a good at any price. A change in demand causes the entire demand curve to shift to the left or right.

Alex Rodgers

on 1 February 2013

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Transcript of Chaper 4-2, Shifts of the Demand Curve

Background photo by t.shigesa What Causes The Shift? Income
Consumer Expectations
Consumer Tastes
Advertisement Consumer Expectations and Population Chapter 4, Section 2
Shifts of the Demand Curve Normal Goods If an individuals income increases it
can cause them to buy more normal
goods. Increased income, however,
can produce inferior goods, or goods
that increased income causes demand
to fall for those goods. This includes
things like used cars and generic cereal. Population Demand for things such as used cars
increase so to satisfy a growing populations
transportation issue. Prices of related goods can spike demand Complements - two goods that are bought and used together. By Alex Rodgers & Sydni Aceves Ceteris Paribus
Is Latin for "all
other things held
constant There are many factors that effect supply and demand such as:
-the amount of business a company has
-changing of prices of materials and services, etc.. Changes in Demand A demand curve is only accurate as long as the ceteris paribus assumption is true, this means that no changes other than the price affects the consumers decision.
We move along the curve to a different quantity demanded when the price changes.
The movement along the demand curve is referred to as a decrease in the quantity demanded.
When we drop the ceteris paribus rule the other factors prevent us from traveling along the demand curve, the entire demand curve shifts instead. Changes in Demand Part II When the demand curve shifts it means that at every price the consumers buy a different quantity.
This is called a change in demand. Goods that consumers demand more of when their incomes increase. Income Inferior Goods Goods that an increase in income caused demand for these goods to fall. If the price goes up in a couple of days such as the price of sugar a consumer will more than likely buy it sooner at the lower price. If the price is going to drop then the consumer will more than likely hold out on buying the item or sugar in this case until the price goes down. Expectations Consumer Tastes and Advertising Advertising campaigns, social trends, and the influence of television shows can all be factors that can rise the demand for a product quickly. A new form of shoe, such as crocks in the past, can become popular over night and cause demand to skyrocket but the quickly become a thing of the past. Advertising can also make a product look very attractive to the public which can cause a spike in demand. Substitutes - goods used in a place of one another. A complement to skis is ski boots, an increase in boot price will cause demand for skis to drop.

A substitute for skis is a snow board. Which ever is higher priced will caused the demand for that good to decrease. Questions!!! What is an example of supply and demand?
What is a complement good?
What is 1 of the 5 factors that can change supply and demand?
What are possible negative effects of supply and demand?
What are possible positive effects of supply and demand?
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