causes of a shift in the demand curve (D)

Demand and Supply Curves

Causes of a Shift in the Demand Curve (D)

A shift of the demand curve means that at every price, the quantity demanded changes. Think of it like a crowd at a concert: if the concert becomes more popular, more people will want to attend even if the ticket price stays the same. 📈 Movement along the curve is caused by a price change, not a shift.

1. Change in Consumer Income 💰
   • Higher income → more demand for normal goods.
   • Lower income → less demand for normal goods, more for inferior goods.
   Exam Tip: Remember the income effect – if a good is normal, demand rises with income; if inferior, demand falls. Use the words “normal” and “inferior” in your answer.
2. Change in Tastes and Preferences 🌟
   • New fashion trend → demand for that style rises.
   • Health scare → demand for sugary drinks falls.
   Exam Tip: Use the phrase “shift right” for an increase in demand, “shift left” for a decrease. Give a concrete example to show you understand the concept.
3. Price of Related Goods 🔄
   • Substitutes: If the price of coffee rises, tea demand rises.
   • Complements: If the price of printers falls, demand for ink cartridges rises.
   Exam Tip: Identify the related good and state whether it is a substitute or complement. Then explain the direction of the shift.
4. Expectations About Future Prices or Income 🔮
   • Expecting a price increase → current demand rises.
   • Expecting a job loss → current demand falls.
   Exam Tip: Mention the term expectation effect and give a brief example.
5. Number of Buyers 👥
   • Population growth → more buyers, demand increases.
   • Migration away from a city → fewer buyers, demand decreases.
   Exam Tip: Use the phrase “increase in the number of consumers” to explain a rightward shift.

Quick Recap:

• Rightward shift = increase in demand.
• Leftward shift = decrease in demand.
• Remember the key terms: income effect, substitution effect, complement, expectation effect.