Assignment: Demand Curve Visual –Due _______________________________
•
There are five factors that cause the demand curve to shift
1. Change in buyer income (example: you get a big bonus so you demand more goods)
2. Change in the price of related goods is actually 2 things:
• Substitute-any good that can be replace the good you are wanting to buy
• The price of one good and the demand for the other good move in the same
direction (example: price of French fries increase, so demand for potato
chips increases)
• Complements—any two goods that you consumer together
• The price of one good and the demand for the other good move in the
opposite direction (example: the price of milk increase, so the demand for
cereal decrease)
3. Change in tastes or preferences (example: if it was announced that pork makes you smarter,
people would prefer to eat pork and its demand would increase)
4. Change in future expectations (example: if you knew the price of gas was going up
tomorrow, demand for gas would increase today)
5. Number of buyers- the more buyers the higher the demand (example: a massive way of
immigration to New England increase demand for coats)
ASSIGNMENT
Divide a piece of paper into 6 squares. For each of the 5 variables that cause a shift in the demand curve
provide:
 State the variable
 A description of the variable (1 point each)
 A scenario using that variable (1 point each)
 A diagram showing how your scenario shifted the demand curve—be sure to label your X and Y axes
(2 point each)
NOTE: You need to do BOTH substitute and complement for price of related goods—that’s why you will
need six squares
Example:
Price of Related Goods
If the price of a complement decreases, demand for the other good shifts right.
Price
Scenario: The price of coffee decreases.
Quantity Demanded Coffee Creamer