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Demand Change in QD or Change in D ©2012, TESCCC Economics Unit 4, Lesson 1.

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Presentation on theme: "Demand Change in QD or Change in D ©2012, TESCCC Economics Unit 4, Lesson 1."— Presentation transcript:

1 Demand Change in QD or Change in D ©2012, TESCCC Economics Unit 4, Lesson 1

2 Objectives 1.Understand the difference between a change in demand and a change in quantity demanded. 2.Identify the determinants of a change in demand and quantity demanded. 3.Graph a change in D and QD. ©2012, TESCCC

3 Change in Quantity Demanded A change in quantity demanded is caused by a change in price. This is the only reason for a change in quantity demanded. ©2012, TESCCC

4 P Q P1P1 Q1Q1 D

5 Change in Quantity Demanded Since the demand curve shows the quantity demanded at all prices if price is the only thing that changes, then our demand curve is still valid and we can show this change by simply moving along the demand curve. ©2012, TESCCC

6 P Q P1P1 Q2Q2 Q1Q1 P2P2 D QD © 2012, TESCCC

7 Change in Demand ©2012, TESCCC

8 If one of the conditions changes, willingness or financial ability of people to buy different amounts of goods and services, we see a change in demand at each and every price level. The original demand curve is no longer valid. We must have a new demand curve. This is called a shift of the demand curve. ©2012, TESCCC

9 The entire demand curve shifts. Increase in Demand D1D1 P Q ©2012, TESCCC

10 D1D1 D2D2 The entire demand curve shifts. Increase in Demand P Q Shift Right ©2012, TESCCC

11 The entire demand curve shifts. Increase in Demand Decrease in Demand D1D1 D2D2 D1D1 P Q P Q Shift Right ©2012, TESCCC

12 D2D2 The entire demand curve shifts. Increase in Demand Decrease in Demand D1D1 D2D2 D1D1 P Q P Q Shift Left Shift Right ©2012, TESCCC

13 Five Reasons for a Change in Demand ©2012, TESCCC

14 Five Reasons for a Change in Demand 1. Change in Consumer Taste or Preference ©2012, TESCCC

15 1. Change in Consumer Taste or Preference Includes advertising, news reports, trends, etc. Five Reasons for a Change in Demand ©2012, TESCCC

16 1. Change in Consumer Taste or Preference Includes advertising, news reports, trends, etc. The good becomes more popular, so the curve: Shifts Right Five Reasons for a Change in Demand ©2012, TESCCC

17 1. Change in Consumer Taste or Preference Includes advertising, news reports, trends, etc. Or If the good becomes unpopular, the curve will: Shift Left Five Reasons for a Change in Demand ©2012, TESCCC

18 Five Reasons for a Change in Demand 2. Change in Consumer Income ©2012, TESCCC

19 Five Reasons for a Change in Demand 2. Change in Consumer Income Income Demand at each and every price level Shift Right Income Demand at each and every price level Shift Left (if the good is a normal good) ©2012, TESCCC

20 3. Change in Market Size or Number of Buyers or Groups Within the Population Five Reasons for a Change in Demand ©2012, TESCCC

21 3. Change in Market Size or Number of Buyers or Groups Within the Population Market Size Demand Shift Right Market Size Demand Shift Left Five Reasons for a Change in Demand ©2012, TESCCC

22 4. Change in Consumer Expectations about Price Five Reasons for a Change in Demand ©2012, TESCCC

23 4. Change in Consumer Expectations If buyers think price will go up in the future, then demand now Shift Right If buyers think price will go down in the future, then demand now Shift Left Five Reasons for a Change in Demand ©2012, TESCCC

24 Five Reasons for a Change in Demand 5. Change in Price of Related Goods There are two types of related goods. ©2012, TESCCC

25 Five Reasons for a Change in Demand 5. Change in Price of Related Goods A. Substitute - can use one good in place of another © 2012, TESCCC

26 Five Reasons for a Change in Demand 5. Price of Related Goods A. Substitute - can use one good in place of another Price of butter, then demand for margarine? ©2012, TESCCC

27 Five Reasons for a Change in Demand 5. Price of Related Goods A. Substitute - can use one good in place of another Price of butter, then demand for margarine. Shift Right ©2012, TESCCC

28 Five Reasons for a Change in Demand 5. Price of Related Goods B. Complement - one good used with another good ©2012, TESCCC

29 Five Reasons for a Change in Demand 5. Price of Related Goods B. Complement - one good used with another good Price of milk, then the demand for cookies? © 2012, TESCCC

30 Five Reasons for a Change in Demand 5. Price of Related Goods B. Complement - one good needed to use another good Price of milk, then the demand for cookies. Shift Left ©2012, TESCCC

31 TIMER Change in consumer Taste Change in consumer Income Change in Market Size or buyers Change in consumer Expectations Change in price of Related Goods Five Reasons for a Change in Demand – This might help you remember these reasons. ©2012, TESCCC


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