Demand and Supply - Demand Shift pg-2

We represent a change in tastes graphically with a shift of the demand curve. The direction of the shift depends on the nature of the change. For example, at the end of four years of college your demand curve for pizza may have shifted back, or down, meaning that you don't care as much for pizza as you used to. At the same time, your demand curve for Italian or French cuisine may have shifted out, or up, if you have developed a preference for somewhat nicer dining.

When tastes change such that a good or service becomes more desirable we say that demand shifts out, or demand shifts up, or demand shifts up and to the right or that demand increases. All these are equivalent. Be cautious not to confuse a demand increase with an increase in quantity demanded. An increase in quantity demanded is the result of a decrease in price and is a movement along the demand curve. An increase in demand, or a demand increase, is a shift up, or out, of the demand curve and means that more will be demanded at every price. Economists are usually very careful in introductory courses to be clear on this, and we will strive to be clear as well. As you become more comfortable with understanding demand and supply analysis you will find that context will make it almost impossible to mistake these two very different changes, even thought they sound very similar.

If tastes change such that a good or service becomes less desirable the demand curve shifts back, or down, or down and to the left or there is a decrease in demand. Again, do not confuse this with a decrease in quantity demanded that is the result of an increase in price.

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