Demand curves are accurate as long as there are no other changes than PRICE Price causes movement ALONG the demand curve Other factors cause the demand curve to SHIFT A shift in a demand curve is not the same as moving ID: 913904
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Slide1
Ceteris Paribus
“All other things held constant”
Demand curves are accurate as long as there are no other changes than
PRICE
Price causes movement
ALONG
the demand curve
Other factors cause the demand curve to
SHIFT
Slide2A shift in a demand curve is not the same as moving
along
a demand curve.
Slide3Normal v. Inferior Goods
Most goods are normal goods-
goods we demand more of when our income increasesEx. new cars, HDTV
Inferior goods are
those you would buy in smaller quantities if income increased
Ex. generic products, used cars
Slide4What causes a shift?
Income
Inferior goods are purchased when income drops
Consumer Expectations
Expectations of higher or lower prices in the future can cause demand to increase or decrease
Slide5What causes a shift?
Population
Rise in population creates higher demand for housing, food, utilities, etc.
Consumer Taste/Advertising
Advertising & publicity often play a role in creating fads & social trends
Slide6Complements v. Substitutes
Complements are
two goods that are bought and used togetherExamples?Substitutes are goods used in place of one another
Examples?
Slide7We can sum up these factors as:
T
Tastes & preferencesR Related goods
I
Income
P
PopulationE Expected pricingComplete demand scenarios worksheet on your own.