Demand Curve Shifters
Introduction
The demand curve is used to illustrate how price affects quantity demanded, and at the same time, other things being equal.
These "other things" are non-price determinants of demand such as things that determine buyers' demand for a good, other than the good's price).
Changes in them shift the D curve.
Demand Curve Shifters: # of Buyers
If the number of buyers increases and the quantity demanded increases at each price, then D curve shifts to the right.
See the curve below where the increase is for example 5.
Demand Curve Shifters: Prices of Related Goods
- Two goods are considered as substitutes if an increase in the price of one causes an increase in demand for the other.
- Example: iPhone and Samsung mobile phones. An increase in the price of iPhone increases demand for Samsung phones,
shifting Samsang demand curve to the right.
- Laptops and Desktops is another example
- Two goods are considered as complements if an increase in the price of one causes a fall in demand for the other.
- Example: if gas price rises, people buy fewer cars. Here, the Car demand shifts left.
- Printers and ink cartridges is another example
Demand Curve Shifters: Expectations
- Expectations have a potential impact on consumers's buying decisions.
- For example, if people expect their salaries to increase, their demand for new cars may also increase.
Here, the D curve wil shift to the right.
Exercise
Exercise on Demand Curve Shifters
Check your answers here:
Solution to the Exercise on Demand Curve Shifters
For more details, please contact me here.
Date of last modification: 2019