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ECONOMICS CHAPTER 3, SECTION 2

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ECONOMICS CHAPTER 3, SECTION 2 Changes in Demand I. Demand Shifts I. Demand Shifts B. The result of non-price factors affecting demand is that the entire demand curve ... – PowerPoint PPT presentation

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Title: ECONOMICS CHAPTER 3, SECTION 2


1
ECONOMICSCHAPTER 3, SECTION 2
  • Changes in Demand

2
I. Demand Shifts
  • A. With the passage of time, factors other than
    price (non-price factors) can affect demand for a
    good or service.

3
I. Demand Shifts
  • B. The result of non-price factors affecting
    demand is that the entire demand curve shifts
    either to the right or to the left.

4
I. Demand Shifts
  • P
  • Q

5
I. Demand Shifts
  • C. This means that quantity demanded changed at
    every price.

6
II. Increases and Decreases in Demand
  • A.
  • An INCREASE in demand shifts the entire demand
    curve to the RIGHT.
  • I. Demand Shifts
  • P
  • D1 D2



  • Q

7
II. Increases and Decreases in Demand
  • B.
  • A DECREASE in demand shifts the entire demand
    curve to the LEFT.
  • I. Demand Shifts
  • P
  • D1
  • D2
  • Q

8
III. Determinants of Demand
  • A. There are five non-price factors which
    determine demand for a good or service
  • 1. Consumer Taste and Preference
  • 2. Market Size
  • 3. Income
  • 4. Prices of Related Goods
  • 5. Consumer Expectations

9
1. Consumer Taste and Preference
  • Consumers taste and preference for comfort,
    quality, trends, holidays, seasons, etc. can have
    an effect on demand.
  • Ex.

10
2. Market Size
  • Changes in the size of the market can have an
    effect on demand. Three factors can change
    market size

11
2. Market Size
  • A. Decisions made by private businesses,
    ex. Production decisions, advertising campaigns,
    hiring practices, use of celebrities

12
2. Market Size
  • B. Government policies, ex. Regulations/laws,
    trade with foreign countries

13
2. Market Size
  • C. New technology, ex.

14
3. Income
  • Changes in consumers income can have an effect
    on demand.
  • Ex. Losing a job, getting a pay raise, being
    promoted

15
4. Prices of Related Goods
  • The demand for a good or service can be affected
    by the prices of related goods
  • There are two types of related goods

16
4. Prices of Related Goods
  • A. Substitute goods are goods that can be used to
    replace a similar good
  • Ex.
  • P of original good increases, D for substitute
    good increases
  • P of original good decreases, D for substitute
    good decreases

17
4. Prices of Related Goods
  • B. Complementary goods are goods that are usually
    used together
  • Ex.
  • P of original good increases, D for complement
    good decreases
  • P of original good decreases, D for complement
    good increases

18
5. Consumer Expectations
  • Expectations of ones future income can have an
    effect on demand.
  • Ex.
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