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I will be discussing what influences the demand curve and how the changes in demand curve affect economic equilibrium.

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1. What did you learn about your topic that surprised you the most? Answer : there are a lot more factors to consider with supply and demand
2. Provide a real-life example of how this topic is relevant or interesting Answer: The new ford bronco as an insane demand at the moment and because of this some dealer ships are marking up the broncos they have by 40-50k because some people are willing to pay that amount of money
for you.
3. If you could pass on your knowledge to a family member or friend, what
do you think is the most important thing to pass on? : Low demand would not necessarily decrease the price of a product

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The demand curve explains the relationship between price and number of sales (also called product demand). Companies can leverage some control over their sales by manipulating the price, but there are also independent factors that shift the demand curve to the left or right.

Tip

A leftward shift in the demand curve indicates a decrease in demand at every price point.

As the Corporate Finance Institute explains, a demand curve is plotted on a graph with the quantity demanded represented along the x-axis and the price represented along the y-axis. According to the law of demand, the demand curve always has a downward slope; as the price goes down, the quantity demanded goes up.

Several factors explain this phenomenon. For example, the "income effect" refers to the simple fact that a consumer's purchasing power increases as the price of a product goes down. If you've ever stocked up on a product because it was on sale, you've directly experienced how a lower price can influence demand. The opposite is true as well: Consumers may avoid purchasing products when the price is high because their purchasing power is diminished.

Another factor called the "substitution effect" refers to consumers' ability to purchase different (and more affordable) products if the product they originally wanted is too expensive. For example, consumers might switch to a cheaper brand or choose a substitute product (doughnuts versus cake, for example). Finally, according to Brigham Young University - Idaho, the "law of diminishing utility" also helps to explain the demand curve by pointing out consumers' tendency to become bored as they buy the same products over and over again. If you've ever stood in the cereal aisle wondering what to try next, you've experienced this law firsthand.

It's important to differentiate between movement along the demand curve and a shift of the demand curve. The income effect, substitution effect and law of diminishing utility all explain why points move down along the curve. However, the entire demand curve can also shift left or right without moving up or down on the y-axis. This means the demand changes independently of the price.

If the demand curve shifts to the right, consumers want to buy higher quantities for the same amount of money. For example, if a candy shop could only sell one candy bar per day when charging $5 but suddenly 10 people came in to buy the same $5 candy bar, the demand curve would shift to the right to indicate that increase in demand.

A leftward shift in the demand curve indicates a decrease in demand because consumers are purchasing fewer products for the same price. Maybe zero people buy the candy bar, so the shop lowers the price to $4. The normal demand curve would indicate that this price reduction should be sufficient to sell a candy bar. However, when the demand stays the same and no one buys the candy bar for a lower price, the demand curve has shifted to the left.

The demand curve also shifts to the left or right when another variable is introduced. For example, if a celebrity gives an interview and mentions his favorite candy bar, demand for that candy bar might increase due to consumers' curiosity or desire to be trendy. The price didn't have to change for demand to increase, so the curve shifts to the right.

However, if a news report came out that associated the candy bar with something bad - like cancer - demand would decrease regardless of whether the price also decreased. This would cause the demand curve to shift to the left. Other factors that shift the demand curve to the left include market saturation, long product life span or an out-of-style product.

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What Causes the Demand Curve to Shift to the Left?

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What Causes the Demand Curve to Shift to the Left?. A demand curve is a tool used in economics to describe the relationship between the price of a good and its marketplace demand. The demand curve is sometimes based on actual sales data and is sometimes estimated based on economic theory or business experience.

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A shift in the demand curve is when a determinant of demand other than price changes. It occurs when demand for goods and services changes even though the price didn't.

To understand this, you must first understand what the demand curve does. It plots the demand schedule. That is a chart that details exactly how many units will be bought at each price. It's guided by the law of demand which says people will buy fewer units as the price increases. That's as long as nothing else changes, an economic principle known as ceteris paribus. That means all determinants of demand other than price must stay the same.

A shift in the demand curve is the unusual circumstance when the opposite occurs. Price remains the same but at least one of the other five determinants change. Those determinants are:

1. Income of the buyers.

2. Consumer trends and tastes.

3. Expectations of future price, supply, needs, etc.

4. The price of related goods. These can be substitutes, such as beef versus chicken. They can also be complementary, such as beef and Worcestershire sauce.

5. The number of potential buyers. This determinant applies to aggregate demand only.

Factors That Cause a Demand Curve to Shift

When the demand curve shifts, it changes the amount purchased at every price point. For example, when incomes rise, people can buy more of everything they want. In the short-term, the price will remain the same and the quantity sold will increase.

The same effect occurs if consumer trends or tastes change. If people switch to electric vehicles, they will buy less gas even if the price of gas remains the same.

The curve shifts to the left if the determinant causes demand to drop. That means less of the good or service is demanded at every price. That happens during a recession when buyers' incomes drop. They will buy less of everything, even though the price is the same.

The curve shifts to the right if the determinant causes demand to increase. This means more of the good or service are demanded at everyprice. When the economy is booming, buyers' incomes will rise. They'll buy more of everything, even though the price hasn't changed.

Here are examples of how the five determinants of demand other than price can shift the demand curve.

1. Income of the buyers: If you get a raise, you're more likely to buy more of both steak and chicken, even if their prices don't change. That shifts the demand curves for both to the right.

2. Consumer trends: During the mad cow disease scare, consumers preferred chicken over beef. Even though the price of beef hadn't changed, the quantity demanded was lower at every price. That shifted the demand curve to the left.

3. Expectations of future price: When people expect prices to rise in the future, they will stock up now, even though the price hasn't even changed. That shifts the demand curve to the right. For this reason, the Federal Reserve sets up an expectation of mild inflation. Its target inflation rate is 2%.

4. The price of related goods: If the price of beef rises, you'll buy more chicken even though its price didn't change. The increase in the price of a substitute, beef, shifts the demand curve to the right for chicken. The opposite occurs with the demand for Worcestershire sauce, a complementary product. Its demand curve will shift to the left. You are less likely to buy it, even though the price didn't change, since you have less beef to put it on.

5. The number of potential buyers: This factor affects aggregate demand only. When there's a flood of new consumers in a market, they will naturally buy more product at the same price. That shifts the demand curve to the right. That happened when standards were lowered for mortgages in 2005. Suddenly, people who hadn't been eligible for a home loan could get one with no money down. More people bought homes until the demand outpaced supply. At that point, prices rose in response to the shift in the demand curve.

Key Takeaways

1. When there is movement only along the demand curve, this means price is the only factor that is changing.

2. When the entire demand curve shifts, it signals that other determinants of demand, excluding price, have changed.

3. Aside from price, other determinants of demand that affect the demand schedule or chart are: income, consumer tastes, expectations, price of related goods, and number of buyers.

4. Shift of the demand curve to the right indicates an increase in demand at whatever price because a factor, such as consumer trend or taste, has risen for it. Conversely, a shift to the left displays a decrease in demand at whatever price because another factor, such as number of buyers, has slumped.

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What Does It Mean When There's a Shift in Demand Curve?

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A shift in the demand curve is when a determinant of demand other than price changes. It occurs when demand for goods and services changes even though the price didn't. To understand this, you must first understand what the demand curve does. It plots the demand schedule.

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This video basically explains how supply and demand affects the equilibrium he uses the example of ice cream. in one slide it shows how an increase in the demand was caused by a new supplier entering the market and although supply and demand to not need to correlate in this case they do because the new supplier has increased the popularity of the ice cream which would increase the demand and in turn that could lead to a price increase that would not effect demand.

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Changes in equilibrium price and quantity when supply and demand change | Khan Academy

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This video talks about how a leftward shift happens on the demand curve. There are several factors such as a decrease in population. a increase in price. a decrease in income.

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The Demand Curve - shifts to the left.wmv

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I chose this video for my presentation because it simplifies and explains the demand curve and what it can be affected by. For example product price will shift the demand to the right .if the price decrease which would increase popularity or if the price increases the demand curve would shift to the left because there would be less demand and people would move to other products.

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Demand and Supply Explained- Macro Topic 1.4 (Micro Topic 2.1)

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Changes in equilibrium price and quantity: the four-step process (article) | Khan Academy

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Let's look at some step-by-step examples of shifting supply and demand curves.

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demand curve, in economics, a graphic representation of the relationship between product price and the quantity of the product demanded. It is drawn with price on the vertical axis of the graph and quantity demanded on the horizontal axis. With few exceptions, the demand curve is delineated as sloping downward from left to right because price and quantity demanded are inversely related (i.e., the lower the price of a product, the higher the demand or number of sales). This relationship is contingent on certain ceteris paribus (other things equal) conditions remaining constant. Such conditions include the number of consumers in the market, consumer tastes or preferences, prices of substitute goods, consumer price expectations, and personal income. A change in one or more of these conditions causes a change in demand, which is reflected by a shift in the location of the demand curve. A shift to the left indicates a decrease in demand, while a movement to the right an increase. Compare supply curve.

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demand curve, in economics, a graphic representation of the relationship between product price and the quantity of the product demanded. It is drawn with price on the vertical axis of the graph and quantity demanded on the horizontal axis. With few exceptions, the demand curve is delineated as

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A shift in the demand curve from D to D1 is caused by....

- Product decreases in popularity
- Overall decrease in income
- Decrease in the price of substitutes
- An increase in the price of compliment items
- Expectations discourage buying of product

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A shift to the right on the demand curve can be affected by several factors such as an increase in income or an increase in competing products for example Apple.v.Android. also a decrease in accessories price would lead to more demand for a product and example of this would be video games for an xbox or a playstation if the games are to expensive the game console loses its value

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A shift in the demand curve from D1 to D2 is caused by....
- Society deems the product more popular
- Population gains a increase in disposable income
- The price of substitute product increases
- Compliment prices decrease