Transcript in demand
Factors Which Change Demand Change in Demand • Change in Demand: When people are wiling to buy different amounts of the product at the same prices • The demand line shifts to the right (increase) or left (decrease) Hershey Kiss Power! GOOD NEWS! Scientists have just discovered that Hershey Kisses have a special chemical inside of them that helps you be smarter and stronger each time you eat one! How many Hershey Kisses will you now buy if they are priced at: 1. $1.00 each 2. $0.50 each 3. $0.10 each Factors That Change Demand • Consumer Income – Increase in income = higher demand (shift to the right) – Decrease in income = lower demand (shift to the left) • Example: 2008-2009 recession • Number of Consumers – More consumers = higher demand – Fewer consumers = lower demand • Baby boomers & hearing aides Factors That Change Demand • Consumer Tastes – More people like it = increase in demand – Less people like it = decrease in demand • Bell bottom jeans in the 70’s and 80’s • Expectations – If prices of a good are expected to go up in the future, demand will go up in the present – If prices of a good are expected to go down in the future, demand will go down in the present • Oil & hurricanes Factors That Change Demand • Substitutes – Goods that can replace other goods • Ex. Pepsi v. Kroger brand soda – Increase in the price of a substitute = increase in the demand for other goods – Decrease in the price of a substitute = decrease in the demand for other goods • Complements – Goods that go along with other goods – Increase in the price of complements = decrease in demand for other goods – Decrease in the price of complements= increase in demand for other goods • Ex. Hot dogs and hot dog buns Important Differences… Change in quantity demanded • Affected ONLY by price changes for the good/service being discussed – The line does not move; the point on the line does Change in demand • Affected by many factors – The demand line moves (shifts) Practice • Changes in consumer tastes – A new “baggy jeans” fad has begun to spread throughout the country. What will happen to the demand for baggy jeans? • Substitutes – Pizza Hut has just dropped the price for their pizzas. What will happen to demand for Papa John’s? • Complements – The cost for a song on iTunes has just been raised to $5.00/song. What will happen to the demand for MP3 players?