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Shift Demand Ch. 4.2

Shift Demand Ch. 4.2. By Lauren Cantu. What it is. Refers to a shift in the demand curve When the quantity demanded increases, curve moves right (vice versa) Happens when ceteris paribus is dropped “ all other things (besides price) held constant ”. What causes it. Income

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Shift Demand Ch. 4.2

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  1. ShiftDemandCh. 4.2 By Lauren Cantu

  2. What it is • Refers to a shift in the demand curve • When the quantity demanded increases, curve moves right (vice versa) • Happens when ceteris paribus is dropped • “all other things (besides price) held constant”

  3. What causes it • Income • Normal goods: Goods that consumers demand more of when their income increases. • Ex: new car vs. used car • Inferior goods: when income increases, demand for these goods fall (you can afford something better) • Ex: mac & cheese, generic cereals, used cars

  4. What causes it • Consumer Expectations • If price is expected to increase in the future, there will be an immediate increase in demand. (vice versa) • Ex: sales • Population • Ex: WWII, Baby Boomers • Consumer tastes/Advertising • Campaigns, social trends, media influences

  5. What causes it • Prices of Related Goods • Complements: two goods that are bought and used together • Ex: skis and ski boots • Substitutes: goods used in place of another • Ex: Snowboards and skis

  6. Real World • Historically and currently, when gas prices have been predicted to rise, consumers will flock to gas stations before the prices rise (increase in demand)

  7. VideoExample • http://www.youtube.com/watch?NR=1&v=DigiWS1YhxI&feature=fvwp

  8. Assessment True or False? • Shift Demand refers to the shift in demand curve. • A new car is an inferior good. • The curve will shift right if there’s an decrease in demand. • Substitutes are goods used in place of another. • Population is a factor that can cause shift.

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