Navigation
Demand and Supply - Demand Shift pg-22

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 GoodIncome Rises Demand Shifts Out
Normal GoodIncome Falls Demand Shifts Back
Inferior GoodIncome Rises Demand Shifts Back
Inferior GoodIncome Falls Demand Shifts Out
SubstitutePrice Rises Demand Shifts Out
SubstitutePrice Falls Demand Shifts Back
ComplementPrice Rises Demand Shifts Back
ComplementPrice Falls Demand Shifts Out
ExpectPrice Increase Demand Shifts Out
ExpectPrice Decrease Demand Shifts Back
back
Copyright © 1995-2005 OnLineTexts.com, Inc. - All Rights Reserved