Shift in Demand Curve Homework Help

A Change in Quantity Demanded and a Change in Demand

An alteration in quantity demanded is the movement along the demand curve. This is brought about by changes in the price of good. A change in demand is the shift of the demand curve. Hence, the increase or decrease in demand means that greater or smaller quantity is purchased at the same cost. This shift in the demand curve results because of change in any of the determinants of the demand.

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Factors which produce shift in the Demand Curve

a)      Tastes and Preferences

Consumers' tastes and preferences change over the period of time. They can be influenced by the factors like education, age and advertisements.

b)     Income

An increase or decrease in the income would generally lead to more or less of a product being bought.

c)      Future Expectations

If the consumers expect prices to increase in the future, they would buy more of the products in order to avoid paying much more in future. Though, if they expect prices to decrease, they would check their consumption/use.

d)     Changes in Population

Changes in the size and the structure of population would influence demand. Usually, an increase in the population would lead to a rise in demand.

e)      Prices of Other Goods

Complements: coffee and sugar.

If price of coffee decreases, more coffee would be bought. This would lead to an increase in the demand for sugar.

Substitutes: butter and margarine.

If the price of margarine falls, consumers would switch their demand from butter to the margarine, which is cheaper now.

f)       Government Policies

If the government introduces new taxes or increases the existing tax rate, the taxpayers' incomes would decrease, hence reducing their demand for the products.

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