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

Transcription

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

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.

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.

4 P P 1 D Q 1 Q

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.

6 P P 2 P 1 D Q 2 Q 1 Q QD

7 Change in Demand

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 The original demand curve is no longer valid.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.

9 The entire demand curve shifts. Increase in Demand P D 1 Q

10 The entire demand curve shifts. Increase in Demand P D 1 D 2 Q Shift Right

11 The entire demand curve shifts. Increase in Demand Decrease in Demand P P D 1 D 2 D 1 Shift Right Q Q

12 The entire demand curve shifts. P Increase in Demand Decrease in Demand P D 1 D 2 D 2 D 1 Shift Right Q Shift Left Q

13

14 1. Change in Consumer Taste or Preference

15 1. Change in Consumer Taste or Preference Includes advertising, news reports, trends, etc.

16 1. Change in Consumer Taste or Preference Includes advertising, news reports, trends, etc. The good becomes more popular, so the curve: Shifts Right

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

18 2. Change in Consumer Income

19 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)

20 3. Change in Market Size or Number of Buyers or Groups Within the Population

21 3. Change in Market Size or Number of Buyers or Groups Within the Population Market Size Market Size Demand Shift Right Demand Shift Left

22 4. Change in Consumer Expectations about Price

23 4. Change in Consumer Expectations If buyers think price will go up in the future, then demand Shift Right now If buyers think price will go down in the future, then demand Shift Left now

24 5. Change in Price of Related Goods There are two types of related goods.

25 5. Change in Price of Related Goods A. Substitute - can use one good in place of another

26 5. Price of Related Goods A. Substitute - can use one good in place of another Price of butter, then demand for margarine?

27 5. Price of Related Goods A. Substitute - can use one good in place of another Price of butter, then demand for margarine. Shift Right

28 5. Price of Related Goods B. Complement - one good used with another good

29 5. Price of Related Goods B. Complement - one good used with another good Price of milk, then the demand for cookies?

30 5. Price of Related Goods B. Complement - one good needed to use another good Price of milk, then the demand for cookies. Shift Left

31 This might help you remember these reasons. 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