Transcript Chapter 3 Demand

SECTION 2
Changes in Demand
Essential Question:
 Explain what it means when a product’s
demand shifts, Describe each of the five
non-price determinants of demand, and
explain the difference between substitute and
complimentary goods.
1
SECTION 2
Changes in Demand
Shifts in Demand:
 Factors besides price can cause demand to
increase or decrease
 When this occurs, the quantity demanded
changes at each and every price. This change is
called a shift.
 This shift is best seen when looking at a
demand curve. A new curve will be drawn,
shifting to the right or left.
2
SECTION 2
Changes in Demand
Shifts in Demand (DO NOT COPY):
3
SECTION 2
Changes in Demand
Determinants of product demand shifts
(Determinants of Demand or D.O.D.)
 Consumer tastes and preferences- When
Consumers suddenly dislike or like new or
existing products it can cause demand to go
up or down often without logic .
4
SECTION 2
Changes in Demand
Determinants of product demand shifts
(Determinants of Demand or D.O.D.) cont.
 Market size- When a product becomes
available to new group of consumers, or a new
market, demand can increase or decrease as
buyers who did not previously have access
may now have demand for a product, if a
product is no longer available due to a
producer leaving the market, the market size
gets smaller and demand decreases
5
SECTION 2
Changes in Demand
Determinants of product demand shifts
(Determinants of Demand or D.O.D.) cont.
 Income- As consumers increase their
income, they meet the affordability
condition (they already wanted it) to have
demand for new products. This can also go
in the opposite direction if income drops.
6
SECTION 2
Changes in Demand
Determinants of product demand shifts
(Determinants of Demand or D.O.D.) cont.
 Prices of related goods- When a substitute or
complementary good experiences a sudden
price change, it can cause related goods to
gain or lose demand
.
7
SECTION 2
Changes in Demand
Determinants of product demand shifts
(Determinants of Demand or D.O.D.) cont.
 Consumer Expectations- When consumers
believe that certain things affecting their
ability to have demand (want or afford) may
change in the future, it can effect demand in
the present
8
SECTION 2
Changes in Demand
Difference between substitute goods
and complementary goods:
 substitute goods—used to replace the
purchase of similar goods when prices
increase
 complementary goods—commonly used
with other goods
 You DO NOT buy comp good unless you
purchase the original/substitute good
9
SECTION 2
Changes in Demand
Original/Substitute/Complimentary:
Fill in the table below with 5 original goods, 5
substitute goods, and 5 complimentary
goods
Example:
Steak/Hamburger/Steak
Sauce
Original Good
Substitute Good
Complimentary
Good
1.)
2.)
3.)
4.)
10
5.)