This document discusses demand, including the concepts of quantity demanded versus demand curves, and shifts versus movements along the demand curve. It provides examples of factors that can cause demand curves to shift, such as changes in income, preferences, expectations of future prices, and prices of substitutes or complements. It also includes practice problems demonstrating shifts in demand curves resulting from changes in the prices of substitutes and changes in consumer income levels.

1. DEMAND
(part 2)

2. DEMAND
Recall:
There is an indirect
(negative) relationship
between price (P) and
quantity demanded (Qd).
• An increase in the price of eggs leads to a decrease in the
quantity demanded of eggs.
!
• A decrease in the brice of bread leads to an increase in the
quantity demanded of eggs.
P= QD P= QD

3. DEMAND
The amount of a good that buyers
purchase at a higher price is less
because as the price of a good
goes up, so does the opportunity
cost of buying that good.
P= QD P= QD

4. DEMAND
Recall:
Quantity
demanded
(Qd) is
different from
demand (the
demand
curve itself). Change in Other Factors
P
Qd2
QD
Recall:
The demand curve compares
price (P) to quantity
demanded (Qd) at that price.
P
QD
Change in Price
(Change in quantity demanded)
(Change in demand)
Qd1
D1
D2

5. DEMAND
Quantity Demanded (QD):
It’s a specific value and point on
the graph!
P
QD
Demand (D):
It’s what we call the whole curve!
P
QD
Change in Price
(Change in quantity demanded)
Change in Other Factors
(Change in demand)

6. DEMAND
Movement along the demand curve:
results from a change in price P
QD
Change in price
Example:
Max will buy 3 waffles
when they each cost $2.
When the waffles cost 3$,
he will only buy two waffles.

7. DEMAND
Make a list of factors that can cause the
demand curve to SHIFT. P
QD
P
QD
Increase in demand Decrease in demand

8. DEMAND
Shifts: Certain factors cause a higher or lower
quantity to be demanded at every price.
P
D1
QD
D2
Increase in demand
• Change in income
!
• Change in preferences
!
• Change in future
expectations
!
• Change in the price of a
substitute or
compliment good

9. PRACTICE PROBLEM #1
6
!5
!4
!3
!2
1
2 4 6 8 10 12
P (of cookies)
QD (of cookies)
1. Copy this graph.
2. The current price of
cookies is 2$. Indicate
the original price (P1)
and the original
quantity demanded
(Qd1) on the graph.
3. The price of cookies
changes to 5$. Indicate
the new price (P2) and
the new quantity
demanded (Qd2).

10. PRACTICE PROBLEM #1
6
!5
!4
!3
!2
1
1. Draw arrows from P1
to P2, and from Qd1 to
Qd2 to illustrate the
changes taking place.
2. Fill in the blanks with
arrows:
!
2 4 6 8 10 12
QD (of cookies)
____P , ____Qd
!
P (of cookies)

11. PRACTICE PROBLEM #2
P (of Rice Flakes)
QD (of Rice Flakes)
The price of Rice Crisps
cereal just decreased.
What happens to the
demand for Rice Flakes
cereal?
!
Draw a new demand
curve labeled “D2” to
represent this situation.

12. PRACTICE PROBLEM #3
P (of Milk)
QD (of Milk)
The price of Rice Crisps
cereal just decreased.
What happens to the
demand for milk?
!
Draw a new demand
curve labeled “D2” to
represent this situation.

13. PRACTICE PROBLEM #4
P
QD
Max just started a new job
with a higher salary than
his old one. How will this
affect his overall demand
for goods and services?
!
Draw a new demand
curve labeled “D2” to
represent this situation.

14. Complete “Demand Worksheet #2” NOW