We have looked at the effect of changing tastes, income, prices of related goods and expectations on demand. There are, of course, other reasons that demand curves will shift: changes in population characteristics such as size, age distribution, life expectancy; changes in the legal status of some products; introduction of new products and so on.
Demand shifts aren't mysterious. Anything that affects demand behavior, other than a change in the price of the good or service in question, will shift the demand curve.
Below is a table briefly summarizing what we've learned about demand curve shifts. It may be useful as a quick review to be sure you can explain to yourself the reason for each demand shift in the table below.
Demand Shifts | ||
---|---|---|
Normal Good | Income Rises | Demand Shifts Out |
Normal Good | Income Falls | Demand Shifts Back |
Inferior Good | Income Rises | Demand Shifts Back |
Inferior Good | Income Falls | Demand Shifts Out |
Substitute | Price Rises | Demand Shifts Out |
Substitute | Price Falls | Demand Shifts Back |
Complement | Price Rises | Demand Shifts Back |
Complement | Price Falls | Demand Shifts Out |
Expect | Price Increase | Demand Shifts Out |
Expect | Price Decrease | Demand Shifts Back |