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Shifts in Demand.ppt
- 2. Demand Review What is demand? What is the Law of Demand? What makes demand have a downward slope?
- 3. Demand Curve Price Quantity D Inverse relationship between price and quantity demanded P Qd P Qd
- 4. Change in Quantity Demanded Changes in price cause a change in quantity demanded Illustrated by moving from one point to another on the demand curve
- 5. Changes in Demand INCREASE in Demand: people are willing and able to buy MORE of a good AT EVERY PRICE LEVEL DECREASE in Demand: People are willing and able to buy LESS of a good AT EVERY PRICE LEVEL Illustrated by shifting the entire demand curve
- 6. Increase in Demand INCREASE in demand shifts in the demand curve to the RIGHT Price Quantity D1 D2
- 7. Decrease in Demand DECREASE in demand shifts in the demand curve to the LEFT Price Quantity D1 D2
- 8. Why Demand Shifts: Determinants of Demand Income Tastes and Preferences Substitute Goods Complementary Goods Weather Number of Buyers Expectations
- 9. Income: Inferior vs. Normal Goods Inferior Goods Demand decreases when income increases Demand increases when income decreases Normal Goods Demand increases when income increases Demand decreases when income decreases
- 10. Tastes and Preferences Demand increases and decreases with changes in tastes/preferences Fads causes changes in demand Advertising influences consumers’ tastes
- 11. Price of Substitute Goods If price of one good increases, the quantity demanded decreases. DEMAND for its SUBSTITUTE INCREASES If price of a good decreases, the quantity demanded increases DEMAND for its SUBSTITUTE DECREASES
- 12. Price of Substitute Goods Price of of a Good Increases Quantity Demanded Decreases DEMAND for Substitute Good Increases Price of of a Good Decreases Quantity Demanded Increases DEMAND for Substitute Good Decreases
- 13. Price of Complementary Goods If price of one good increases, the quantity demanded decreases. DEMAND for its COMPLEMENT also DECREASES If price of a good decreases, the quantity demanded increases DEMAND for its COMPLEMENT also INCREASES
- 14. Price of Complementary Goods Price of of a Good Increases Quantity Demanded Decreases DEMAND for Complementary Good Decreases Price of of a Good Decreases Quantity Demanded Increases DEMAND for Complementary Good Increases
- 16. Number of Buyers INCREASE of # of buyers INCREASES demand DECREASE of # of buyers DECREASES demand
- 17. Expectations Expectations for future income Demand increases with expected increase in income Demand decreases with expected decrease in income
- 18. Expectations Expectations for future prices If you expect prices to increase in the future, demand will increase now If you expect prices to decrease in the future, demand decreases now
- 19. Expectations Expectations for what product will do for you If product will be good for you, demand increases If product will be bad for you, demand decreases