Demand Curve Shifts: Definition & Real-World Examples

📚 Quick Study Guide

• 📈 A demand curve illustrates how the quantity demanded of a good or service changes with its price, assuming other factors remain constant (ceteris paribus).
• ➡️ A shift in the demand curve occurs when factors other than price change, leading to a different quantity demanded at each price.
• ⚙️ Factors causing shifts include:
• 💰 Income: Normal goods (demand increases with income), Inferior goods (demand decreases with income).
• 🏘️ Prices of related goods: Substitutes (price increase in one increases demand for the other), Complements (price increase in one decreases demand for the other).
• 👨‍👩‍👧‍👦 Consumer tastes: Changes in preferences.
• 📢 Expectations: Future price expectations.
• 🧑‍🤝‍🧑 Number of buyers: More buyers increase demand.
• ⬅️ A shift to the left indicates a decrease in demand.
• ➡️ A shift to the right indicates an increase in demand.

🧪 Practice Quiz

1. Which of the following factors will NOT cause a shift in the demand curve for a product?
   1. A. Change in consumer income
   2. B. Change in the price of the product
   3. C. Change in the price of a related good
   4. D. Change in consumer tastes
2. If the price of coffee increases, what is most likely to happen to the demand for tea (assuming coffee and tea are substitutes)?
   1. A. The demand for tea will decrease.
   2. B. The demand for tea will increase.
   3. C. The demand for tea will remain unchanged.
   4. D. The supply of tea will decrease.
3. If consumer income increases and a product is a normal good, what will happen to the demand for that product?
   1. A. Demand will decrease.
   2. B. Demand will increase.
   3. C. Demand will remain unchanged.
   4. D. The supply will increase.
4. If people expect the price of gasoline to increase next week, what will happen to the demand for gasoline this week?
   1. A. Demand will decrease.
   2. B. Demand will increase.
   3. C. Demand will remain unchanged.
   4. D. Supply will increase.
5. What happens to the demand curve for hot dogs if the price of hot dog buns increases (assuming hot dogs and buns are complements)?
   1. A. The demand curve shifts to the right.
   2. B. The demand curve shifts to the left.
   3. C. The demand curve does not shift.
   4. D. The supply curve shifts to the left.
6. Which of the following would cause a decrease in the demand for cars?
   1. A. A decrease in the price of gasoline.
   2. B. An increase in consumer income.
   3. C. An increase in the price of public transportation.
   4. D. An increase in the interest rates for car loans.
7. Suppose a new study shows that eating apples dramatically improves health. What is the likely impact on the demand curve for apples?
   1. A. The demand curve will shift to the left.
   2. B. The demand curve will shift to the right.
   3. C. The demand curve will not shift.
   4. D. The supply curve will shift to the right.