1. The document discusses the law of demand and factors that cause shifts in demand curves, using durian and coffee as examples. It provides the definitions of demand and the law of demand. 2. Key factors that can shift a demand curve are changes in income, preferences, expectations, and the prices of substitutes or complementary goods. For example, an increase in income would likely shift a demand curve for coffee to the right, meaning more coffee is demanded at each price level. 3. The document illustrates shifts in demand curves graphically and discusses how changes in each factor would lead the curve to shift right for increased demand or left for decreased demand. It emphasizes that ceteris paribus, a higher price

2. DURIAN
P 50/KILO
DURIAN
P 30/KILO
OBJECTIVES
1. Understand and analyze the likely change in demand
given changes in price or changes in the price of
related goods such as substitutes and compliments
goods, income, taste and preferences, and
expectations.
2. Apply the concept and the law of demand by creating
their personal demand curve and schedule as guide
for daily economic decision-making activity.

3. TERMS
• Demand
• Law of
Demand
•The quantity of a good or service that
buyers are willing and able to buy at
all possible prices during a period of
time.
•As the price of a good or service rises
(or falls), the quantity of that good or
service that people are willing and
able to buy during a certain period of
time falls (or rises).

4. The Law of DEMAND
All things being equal,
IF THEN
P Qd
CETERIS PARIBUS

5. Role of Consumer
DEMAND CURVE
QTY
Price per
kilo of
Durian
Kilo of Durian
20
30
40
50
5 10 15 20
P
D
PRICE QUANTITY
P 20 18
P 30 10
P 40 6
P 50 3

6. INCOME EFFECT
A rise in price for
the Big Mac will
cause an impact to
a person’s income
P Qd

7. SHIFTS in the Demand Curve
P 10
25 4010
D
What factors
would cause
a SHIFT in
the demand
for coffee?
P

8. SHIFTS in the Demand Curve
P 10
25 40
D
Income
What would
happen if you
receive an increase
in income?
More coffee is demanded at P10
D2
P

9. SHIFTS in the Demand Curve
P 10
25 0
D
Income
What would happen
if your income were
to increase…BUT
demand went
down?Less coffee is demanded at P10
D2
10
If you would buy the same
amount of a good/service
regardless of a change in
income you would have a
NEUTRAL GOOD
(perhaps like toilet paper or toothpaste)
P

10. SHIFTS in the Demand Curve
P 10
25 0
D
Income
What would
happen if your
income were
reduced?
Less coffee is demanded at P10
D2
10
P

11. SHIFTS in the Demand Curve
P10
25 40
D What if you began
to enjoy coffee
more than before?
More coffee is demanded at P10
D2
P Change in
Preferences

12. SHIFTS in the Demand Curve
P10
25 0
D
Change in
Preferences
What if you
started to get sick
of drinking coffee?
Less coffee is demanded at P10
D2
10
P

13. SHIFTS in the Demand Curve
P 10
25 0
D
Expectations
What if you knew
there was going to
be a sale on coffee
next week?
Less coffee is demanded at P10
D2
10
P

14. SHIFTS in the Demand Curve
P 10
25 40
D
Expectations
What if you knew
that a sale on
coffee were
ending tonight?
More coffee is demanded at P10
D2
P

15. SHIFTS in the Demand Curve
P 10
25 0
D
Price of
Related Goods
Less coffee is demanded at P10
D2
10
SUBSTITUTES
P

16. SHIFTS in the Demand Curve
P 10
25 40
D
More coffee is demanded at P10
D2
SUBSTITUTES
Price of
Related Goods
P

17. SHIFTS in the Demand Curve
P 10
25 40
D
More coffee is demanded at P10
D2
COMPLIMENTS
Price of
Related Goods
What if the price
of donuts went
down?
P

18. SHIFTS in the Demand Curve
P 10
25 0
D
Price of
Related Goods
Less coffee is demanded at P10
D2
10
COMPLIMENTS
What if the price
of donuts went
up?
P