Objectives:
1. Understand the difference between a change in quantity demanded and a shift in demand
curve.
2. Identify the determinants that create changes in demand and that can cause a shift in the
demand curves.
3. Explain how the change in the price of one good can affect demand for a related good.
------------------------------------------------------------------------------------------------------------------------------What would happen to sales of the new Chevrolet Citation if this vehicle was to emit no pollution, was
more powerful than previous engines, and would cost the same?
It would appear that a pizza owner would only have to pick a price and quantity combination that will
earn them the highest profit.
True or False
*Other factors have an effect…
*What would happen if the day after a pizza owner printed new menus to reflect the price
changes, the government announced that tomato sauce had a natural chemical that will
strengthen the immune system.
*What would happen to the demand for pizza?
*Demand for pizza at all prices would climb (increase) - Shift to the _______________!
*When we count the number of pizza slices that would sell, we assume that nothing besides the
price ____________________.
*Economists refer to his assumption as ___________________________… Latin meaning “All
other things held constant.”
*Demand Schedule takes into account only _____________________________.
*It does not take in ________________ or any ________________________.
Changes in Demand….
*A demand curve is accurate only as long as there are no changes _______________________.
*When the price changes, we move ____________ the curve to a different quantity demanded.
*This movement along the demand curve is referred to as a ____________ or ______________
in the quantity demanded
*When we drop the ceteris paribus rule and allow other factors to change, we no longer move
along __________________________________.
*Instead, the _________________ demand curve ________________.
*A shift in the demand curve means that at __________________, consumers buy a different
__________________ than before.
*The shift of the entire curve is what economists refer to as a ____________________________.
What causes a shift?
*Change in the _________________________ does not cause the demand curve to shift.
-The effects of change in price are already built into the demand curve.
-Other factors can cause demand for a good _____________________.
*Examples:
-Income – a consumer’s income affects their _______________________________.
Most items that we purchase are ____________________ – goods that
consumers demand more when their incomes increase.
___________________ – because an increase in income causes demand for these goods to __________.
Consumer Expectations
-Our expectations about the _____________ can affect of demand for certain goods.
-Example:
>You want a new car, but have heard that the slash on 2012 cars will happen in
October. You will wait until October or November or December to buy a
new car.
____________________
-Change in the size of the population will also affect the demand for ________________.
-Example: a growing population needs to be housed and fed. Leads to a demand in
houses, food, and other _______________ and __________________.
____________________ & Advertising
-Advertising campaigns, social trends, the influence of ______________________, or
some combination of these factors that make a product the next _______!
-Changes in___________ and __________________ cannot be explained by changes in
income or population or worries about future price increases.
_____________________
is considered a factor that shifts demand curves because it plays an important role in
many trends.