In this lesson students will identify factors which can cause a demand curve to shift Students will be able to define andor identify the following terms Ceteris Paribus Shifts in the Demand Curve ID: 913907
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Slide1
Shifts of the Demand Curve
In this lesson, students will identify factors which can cause a demand curve to shift.
Students will be able to define and/or identify the following terms:
Ceteris Paribus
Shifts in the Demand Curve
Factors that Cause a Demand Curve to Shift
Complements
Slide22/26/20
Provide an example of something you purchased at a demand.
Slide3While the price of a good influences a consumer’s decision to purchase, it is not the only factor.
Slide4Ceteris Paribus
Ceteris Paribus is a Latin phrase meaning that all other things are held constant.
A demand curve assumes Ceteris Paribus or that only price is changing while all other things are held constant.
In other words, a demand curve only looks at price.
It does not consider other factors that influence demand.
Slide5As any parent will tell you, sometimes cereal is only bought for the toy inside.
Slide6Shifts in the Demand Curve
When a demand curve shifts, it moves.
Price can never shift a demand curve because price is in the demand curve.
To shift a demand curve, it must be some factor other than price.
Slide7Certainly, an outbreak of Mad Cow’s Disease would decrease demand for beef at every price level.
Slide8Shift in the Demand Curve
A change in price cannot shift a demand curve because the effects of changes in price are already built into the demand curve.
However, factors other than price can shift the demand curve.
Consumer tastes, advertising, the price of substitutes, the price of complements, and consumer expectations about future prices can shift the demand curve.
Slide9D is the original demand curve
D1 is the demand curve after it
has shifted. Notice that by shifting
to the left, demand has decreased
at every price level.
Slide10Here is a simple rule to remember:
If the curve shifts left, left means
less. Demand has decreased at
every price level.
If the curve shifts right, right means
more. Demand has increased at
every price level.
Slide11Factors that Can Shift a Demand Curve
The following are factors that can shift a demand curve:
Advertising
Population
Consumer Taste
Consumer Expectations about Future Prices
The Price of Complements
The Price of Substitutes
Slide12The Baby Boom generation increased demand for goods at all price levels.
Slide13Advertising can increase demand at all price levels.
Slide14Complements are goods purchased together.
If the price of the Game Cube rises, people will buy fewer games.
Slide15If we think the price of a popular good will drop, we will buy less at all price levels today and wait for the future lower price.
Slide16Questions for Reflection:
State the Law of Demand.
What is the relationship between the law of demand and Ceteris Paribus?
Why can price not shift a demand curve?
What factors can shift a demand curve?
Provide an example of a complement.
What happens when a demand curve shifts left? Right?