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Changes in Demand and Contributing Factors

Learn how changes in consumer income, prices of related goods, population size, consumer expectations, and consumer tastes affect demand. Discover how you have contributed to the shift in the demand curve.

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Changes in Demand and Contributing Factors

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  1. Learning Objective: • Today I will be able to identify what changes demand by writing a summary about how I have contributed to demand. • Agenda: • Finish Worksheet (Elasticity of Demand) • Learning Objective • Lecture: Ch. 4.3 Changes in Demand • Vocabulary • Quiz—Review Quiz • Exit Slip

  2. Title Notes: Ch. 4.3 Changes in Demand • Determinants of Demand Curve (Shifts the Curve): • Consumer income • The prices of related goods • Number & Composition of consumer goods • Consumer Expectations • Consumer Tastes CONTEMPORARY ECONOMICS: LESSON 4.3

  3. Increase of demand= rightward shift • Consumers more willing & able • 1. Changes in consumer income • Normal goods: Consumption as income • Inferior goods: consumption as income • Less quality goods • Ex. Frozen food, used car, used clothes, etc. • 2. The prices of related goods • Substitutes • Or of prices of substitutes shifts curve. • Ex. Costco Pizza—Caeser’s Pizza • Ex. Pizza--Tacos • Complements • or of price of complements shifts curve with it. • Ex. Pizza & Soda—Chips & Salsa

  4. Check for Understanding • Consumption of Normal Goods increases when…….. • What are inferior goods? • Inferior goods are purchased when……. • What is a substitute for Wing Stop? • Perfect or imperfect substitute? • What are two products that complement each other? CONTEMPORARY ECONOMICS: LESSON 4.3

  5. 3. Changes in the size or composition of the population • Size= population • If pop. grows the # of consumers will increase. • Composition= age group (specific group) • Ex. Baby boomers demanded more baby car seats & baby food---- and more schools. CONTEMPORARY ECONOMICS: LESSON 4.3

  6. 4. Changes in consumer expectations • Future Income • Ex. Work bonus, you spend more now because you expect more money later. • Future price • Ex. If Price for houses is expected to increase, then consumers will buy now (will shift the demand curve) • 5. Changes in consumer tastes • Likes & Interests: • food, music, clothing, reading, movies, TV shows – indeed, all consumer choices – are influenced by consumer tastes. • After economists have ruled other determinants, they attribute shift of curve to consumer tastes.

  7. Check for Understanding • If composition OR population shows what will happen to the demand curve???? • What are TWO expectations consumers have that shift the demand curve???? • What are consumers tastes? CONTEMPORARY ECONOMICS: LESSON 4.3

  8. Causes of Movement along D curve: • A change in price, • other things constant • Changingquantity demanded. • Causes of Shift of D Curve: • A change in one of the determinants, other than price • Changingdemand. Movement Along a Demand Curve VS. Shift of the Demand Curve CONTEMPORARY ECONOMICS: LESSON 4.3

  9. Checking for Understanding What are 5 determinants of demand, and how do changes in each shift the demand curve? The 5 determinants are Consumer income – a rise in income causes an outward (increase) shift of the DC The price of related goods – a rise in this causes an outward (increase) shift of the DC Number of consumers in the market – a rise in this causes an outward (increase) shift of the DC Consumer expectations - a rise in this causes an inward (decrease) shift of the DC Consumer tastes - a rise in this causes an inward (decrease) shift of the DC CONTEMPORARY ECONOMICS: LESSON 3.3

  10. Check for Understanding • Curve moves along the demand curve when……. • Changing……. • Curve shifts the demand curve when….. • Changing…… CONTEMPORARY ECONOMICS: LESSON 4.3

  11. Extensions of Demand Analysis • Role of time in demand • The cost of consumption has two components: • the money price of the good and (price of good) • the time price of the good(value of a good that works faster & more convenient) • The cost of waiting in line • The opportunity cost is not doing something else. CONTEMPORARY ECONOMICS: LESSON 4.3

  12. Checkpoint: pg.123 What’s the difference between the money price of the good and its time price? Money price is how much a good costs. Time price is the monetary value you place on having a good that works faster or is more convenient. CONTEMPORARY ECONOMICS: LESSON 3.3

  13. Vocabulary • Work on vocabulary INDEPENDENTLY! • NO TALKING • Headphones allowed • Ch. 4 Vocabulary • Ch. 5 Vocabulary CONTEMPORARY ECONOMICS: LESSON 4.3

  14. Quiz CONTEMPORARY ECONOMICS: LESSON 4.3

  15. Exit Slip • In what ways do you think you have contributed to the shift of the Demand Curve? CONTEMPORARY ECONOMICS: LESSON 4.3

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