Economics - Demand Shifters

1. Life isLife is
DemandingDemanding

2. Demand = ConsumersDemand = Consumers
Two Factors that need to beTwo Factors that need to be
considered:considered:
1. Willing1. Willing
2. Able ($)2. Able ($)

3. LAW OF DEMANDLAW OF DEMAND
As Price Falls…As Price Falls…
……Quantity Demanded RisesQuantity Demanded Rises
As Price Rises…As Price Rises…
……Quantity Demanded FallsQuantity Demanded Falls
33
Price
Quantity
Demanded

4. Graph out the following demand curve for Flaming Hot Cheetos:Graph out the following demand curve for Flaming Hot Cheetos:
PricePrice Quantity DemandedQuantity Demanded
5.005.00 100100
4.504.50 150150
4.004.00 200200
3.503.50 250250
3.003.00 300300
2.502.50 350350
2.002.00 400400

5. Know this difference:Know this difference:
Change in Quantity Demanded- movements along theChange in Quantity Demanded- movements along the
demand curvedemand curve
Change in Demand- an entire shift in the demand curveChange in Demand- an entire shift in the demand curve
D
4.00
3.00
2.00
100 150
Change in Qty Demanded
D1
Change in Demand
A
B

6. Changes in Demand =Changes in Demand = “Shifters”“Shifters”
1.1. SubstitutesSubstitutes:: AA
competing companycompeting company
makes a similarmakes a similar
product that is lessproduct that is less
expensive causingexpensive causing
demand for your itemdemand for your item
to decrease.to decrease.

7. SubstitutesSubstitutes
7

8. SubstitutesSubstitutes
8

9. SubstitutesSubstitutes
9

10. SubstitutesSubstitutes
10

11. SubstitutesSubstitutes
11

12. 2.2.Preferences/ Advertising/Preferences/ Advertising/
MediaMedia
Some items become theSome items become the
“trendy” must have item.“trendy” must have item.
Millions of dollars areMillions of dollars are
spent letting consumersspent letting consumers
know about the benefitsknow about the benefits
of their product,of their product,
therefore the demandtherefore the demand
may increase.may increase.
ex. Seasonal itemex. Seasonal item

13. Summer of theSummer of the
Shark!!!!!Shark!!!!!

14. 3. Income level of consumers3. Income level of consumers
When a consumer has more or lessWhen a consumer has more or less
money, they will demand more or less.money, they will demand more or less.

15. 1.1. Normal GoodsNormal Goods
As income increases, demand increasesAs income increases, demand increases
As income falls, demand fallsAs income falls, demand falls
Ex. Luxury cars, Sea Food, jewelry, homesEx. Luxury cars, Sea Food, jewelry, homes
2.2. Inferior GoodsInferior Goods
As income increases, demand fallsAs income increases, demand falls
As income falls, demand increasesAs income falls, demand increases
Ex. Generic good, top ramen, spamEx. Generic good, top ramen, spam
1515
The incomes of consumer change the demand, but how
depends on the type of good.

16. Each week you go to your favorite burger place. The price of aEach week you go to your favorite burger place. The price of a
burger has increased, but the price of a chicken sandwich staysburger has increased, but the price of a chicken sandwich stays
the same. Over the course of the week you generally buy boththe same. Over the course of the week you generally buy both
burgers and chicken sandwiches.burgers and chicken sandwiches.
1. How will the increase in the price of burgers affect your1. How will the increase in the price of burgers affect your
purchase of burgers?purchase of burgers?
-you will buy fewer burgers because they are now-you will buy fewer burgers because they are now
relatively more expensive than chicken sandwichesrelatively more expensive than chicken sandwiches
2. Describe how the2. Describe how the substitution effectsubstitution effect changes your purchases.changes your purchases.
-because the price of burgers increased, chicken is now-because the price of burgers increased, chicken is now lessless
expensive. Therefore, you substitute chicken for burgers andexpensive. Therefore, you substitute chicken for burgers and
buy more chicken and fewer burgersbuy more chicken and fewer burgers

17. 4.4. Complimentary Goods:Complimentary Goods: Two goods bought and usedTwo goods bought and used
together. Price of one affects the other.together. Price of one affects the other.
BindingsBindings SnowboardSnowboard
Can you think of others?Can you think of others?

18. 5.5. Expectations:Expectations: If youIf you
expect a higher priceexpect a higher price
next week you will buynext week you will buy
the item today. If youthe item today. If you
think the item will gothink the item will go
on sale you will waiton sale you will wait
until the sale to makeuntil the sale to make
your purchaseyour purchase..

19. Shifts in DemandShifts in Demand
(SPICE = Shifters of the demand curve Right or(SPICE = Shifters of the demand curve Right or
Left)Left)
1.1.SSubstitutesubstitutes
2.2.PPreferences and Advertisingreferences and Advertising
3.3.IIncome Levelncome Level
4.4.CComplimentsompliments
5.5.EExpectationsxpectations

20. PracticePractice
2020
First, identify the determinant (shifter) then
decide if demand will increase or decrease
Shifter Less/More Left or Right
1
2
3
4
5
6
7
8

21. PracticePractice
Hamburgers (a normal good)Hamburgers (a normal good)
1.1. American incomes fall due to recessionAmerican incomes fall due to recession
2.2. Price for Carne Asada burritos falls to $1Price for Carne Asada burritos falls to $1
3.3. New health craze- “No ground beef” hits HollywoodNew health craze- “No ground beef” hits Hollywood
4.4. Hamburger restaurants announce that they will significantlyHamburger restaurants announce that they will significantly
increase prices NEXT monthincrease prices NEXT month
5.5. Price of fries and shakes drops 50%Price of fries and shakes drops 50%
6.6. Advertising campaign starring Brad PittAdvertising campaign starring Brad Pitt
7.7. Tax cuts give Americans more moneyTax cuts give Americans more money
8.8. Child dies from tainted beef….News at 11:00Child dies from tainted beef….News at 11:00
First identify the determinant (Shifter). Then decide
if demand will increase or decrease. Next, which
direction will demand curve shift?
21

22. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
22
Shifter Less/More Left or Right
1 Income Level
2
3
4
5
6
7
8

23. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
23
Shifter Less/More Left or Right
1 Income Level Less
2
3
4
5
6
7
8

24. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
24
Shifter Less/More Left or Right
1 Income Level Less Left
2
3
4
5
6
7
8

25. PracticePractice
Hamburgers (a normal good)Hamburgers (a normal good)
1.1. American incomes fall due to recessionAmerican incomes fall due to recession
2.2. Price for Carne Asada burritos falls to $1Price for Carne Asada burritos falls to $1
3.3. New health craze- “No ground beef” hits HollywoodNew health craze- “No ground beef” hits Hollywood
4.4. Hamburger restaurants announce that they willHamburger restaurants announce that they will
significantly increase prices NEXT monthsignificantly increase prices NEXT month
5.5. Price of fries and shakes drops 50%Price of fries and shakes drops 50%
6.6. Advertising campaign starring Brad PittAdvertising campaign starring Brad Pitt
7.7. Tax cuts give Americans more moneyTax cuts give Americans more money
8.8. Child dies from tainted beef….News at 11:00Child dies from tainted beef….News at 11:00
First identify the determinant (Shifter). Then decide
if demand will increase or decrease. Next, which
direction will demand curve shift?
25

26. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
26
Shifter Less/More Left or Right
1 Income Level Less Right
2 Substitute
3
4
5
6
7
8

27. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
27
Shifter Less/More Left or Right
1 Income Level Less Right
2 Substitute Less
3
4
5
6
7
8

28. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
28
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3
4
5
6
7
8

29. PracticePractice
Hamburgers (a normal good)Hamburgers (a normal good)
1.1. American incomes fall due to recessionAmerican incomes fall due to recession
2.2. Price for Carne Asada burritos falls to $1Price for Carne Asada burritos falls to $1
3.3. New health craze- “No ground beef” hits HollywoodNew health craze- “No ground beef” hits Hollywood
4.4. Hamburger restaurants announce that they will significantlyHamburger restaurants announce that they will significantly
increase prices NEXT monthincrease prices NEXT month
5.5. Price of fries and shakes drops 50%Price of fries and shakes drops 50%
6.6. Advertising campaign starring Brad PittAdvertising campaign starring Brad Pitt
7.7. Tax cuts give Americans more moneyTax cuts give Americans more money
8.8. Child dies from tainted beef….News at 11:00Child dies from tainted beef….News at 11:00
First identify the determinant (Shifter). Then decide
if demand will increase or decrease. Next, which
direction will demand curve shift?
29

30. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
30
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences
4
5
6
7
8

31. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
31
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less
4
5
6
7
8

32. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
32
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4
5
6
7
8

33. PracticePractice
Hamburgers (a normal good)Hamburgers (a normal good)
1.1. American incomes fall due to recessionAmerican incomes fall due to recession
2.2. Price for Carne Asada burritos falls to $1Price for Carne Asada burritos falls to $1
3.3. New health craze- “No ground beef” hits HollywoodNew health craze- “No ground beef” hits Hollywood
4.4. Hamburger restaurants announce that they will significantlyHamburger restaurants announce that they will significantly
increase prices NEXT monthincrease prices NEXT month
5.5. Price of fries and shakes drops 50%Price of fries and shakes drops 50%
6.6. Advertising campaign starring Brad PittAdvertising campaign starring Brad Pitt
7.7. Tax cuts give Americans more moneyTax cuts give Americans more money
8.8. Child dies from tainted beef….News at 11:00Child dies from tainted beef….News at 11:00
First identify the determinant (Shifter). Then decide
if demand will increase or decrease. Next, which
direction will demand curve shift?
33

34. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
34
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations
5
6
7
8

35. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
35
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More
5
6
7
8

36. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
36
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5
6
7
8

37. PracticePractice
Hamburgers (a normal good)Hamburgers (a normal good)
1.1. American incomes fall due to recessionAmerican incomes fall due to recession
2.2. Price for Carne Asada burritos falls to $1Price for Carne Asada burritos falls to $1
3.3. New health craze- “No ground beef” hits HollywoodNew health craze- “No ground beef” hits Hollywood
4.4. Hamburger restaurants announce that they will significantlyHamburger restaurants announce that they will significantly
increase prices NEXT monthincrease prices NEXT month
5.5. Price of fries and shakes drops 50%Price of fries and shakes drops 50%
6.6. Advertising campaign starring Brad PittAdvertising campaign starring Brad Pitt
7.7. Tax cuts give Americans more moneyTax cuts give Americans more money
8.8. Child dies from tainted beef….News at 11:00Child dies from tainted beef….News at 11:00
First identify the determinant (Shifter). Then decide
if demand will increase or decrease. Next, which
direction will demand curve shift?
37

38. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
38
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary
6
7
8

39. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
39
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More
6
7
8

40. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
40
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6
7
8

41. PracticePractice
Hamburgers (a normal good)Hamburgers (a normal good)
1.1. American incomes fall due to recessionAmerican incomes fall due to recession
2.2. Price for Carne Asada burritos falls to $1Price for Carne Asada burritos falls to $1
3.3. New health craze- “No ground beef” hits HollywoodNew health craze- “No ground beef” hits Hollywood
4.4. Hamburger restaurants announce that they will significantlyHamburger restaurants announce that they will significantly
increase prices NEXT monthincrease prices NEXT month
5.5. Price of fries and shakes drops 50%Price of fries and shakes drops 50%
6.6. Advertising campaign starring Brad PittAdvertising campaign starring Brad Pitt
7.7. Tax cuts give Americans more moneyTax cuts give Americans more money
8.8. Child dies from tainted beef….News at 11:00Child dies from tainted beef….News at 11:00
First identify the determinant (Shifter). Then decide
if demand will increase or decrease. Next, which
direction will demand curve shift?
41

42. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
42
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising
7
8

43. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
43
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising More
7
8

44. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
44
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising More Right
7
8

45. PracticePractice
Hamburgers (a normal good)Hamburgers (a normal good)
1.1. American incomes fall due to recessionAmerican incomes fall due to recession
2.2. Price for Carne Asada burritos falls to $1Price for Carne Asada burritos falls to $1
3.3. New health craze- “No ground beef” hits HollywoodNew health craze- “No ground beef” hits Hollywood
4.4. Hamburger restaurants announce that they will significantlyHamburger restaurants announce that they will significantly
increase prices NEXT monthincrease prices NEXT month
5.5. Price of fries and shakes drops 50%Price of fries and shakes drops 50%
6.6. Advertising campaign starring Brad PittAdvertising campaign starring Brad Pitt
7.7. Tax cuts give Americans more moneyTax cuts give Americans more money
8.8. Child dies from tainted beef….News at 11:00Child dies from tainted beef….News at 11:00
First identify the determinant (Shifter). Then decide
if demand will increase or decrease. Next, which
direction will demand curve shift?
45

46. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
46
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising More Right
7 Income Level
8

47. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
47
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising More Right
7 Income Level More
8

48. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
48
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising More Right
7 Income Level More Right
8

49. PracticePractice
Hamburgers (a normal good)Hamburgers (a normal good)
1.1. American incomes fall due to recessionAmerican incomes fall due to recession
2.2. Price for Carne Asada burritos falls to $1Price for Carne Asada burritos falls to $1
3.3. New health craze- “No ground beef” hits HollywoodNew health craze- “No ground beef” hits Hollywood
4.4. Hamburger restaurants announce that they will significantlyHamburger restaurants announce that they will significantly
increase prices NEXT monthincrease prices NEXT month
5.5. Price of fries and shakes drops 50%Price of fries and shakes drops 50%
6.6. Advertising campaign starring Brad PittAdvertising campaign starring Brad Pitt
7.7. Tax cuts give Americans more moneyTax cuts give Americans more money
8.8. Child dies from tainted beef….News at 11:00Child dies from tainted beef….News at 11:00
First identify the determinant (Shifter). Then decide
if demand will increase or decrease. Next, which
direction will demand curve shift?
49

50. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
50
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising More Right
7 Income Level More Right
8 Advertising

51. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
51
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising More Right
7 Income Level More Right
8 Advertising Less

52. PracticePractice
First, identify the determinant (shifter) then
decide if demand will increase or decrease
52
Shifter Less/More Left or Right
1 Income Level Less Left
2 Substitute Less Left
3 Preferences Less Left
4 Expectations More Right
5 Complimentary More Right
6 Advertising More Right
7 Income Level More Right
8 Advertising Less Left

53. Check for UnderstandingCheck for Understanding
1.1. What is the law of demand?What is the law of demand?
2. What is the difference between a change in2. What is the difference between a change in
quantity demanded and a change in demand?quantity demanded and a change in demand?
3. What is the difference between a normal and3. What is the difference between a normal and
inferior good?inferior good?