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Other factors that shift demand curves

Income is not the only factor that causes a shift in demand. Other things that change demand include tastes and preferences, the composition or size of the population, the prices of related goods, and even expectations. A change in any one of the underlying factors that determine what quantity people are willing to buy at a given price will cause a shift in demand. Graphically, the new demand curve lies either to the right (an increase) or to the left (a decrease) of the original demand curve. Let’s look at these factors.

Changing Tastes or Preferences

From 1980 to 2014, the per-person consumption of chicken by Americans rose from 48 pounds per year to 85 pounds per year, and consumption of beef fell from 77 pounds per year to 54 pounds per year, according to the U.S. Department of Agriculture (USDA). Changes like these are largely due to movements in taste, which change the quantity of a good demanded at every price: that is, they shift the demand curve for that good, rightward for chicken and leftward for beef.

Changes in the Composition of the Population

The proportion of elderly citizens in the United States population is rising. It rose from 9.8% in 1970 to 12.6% in 2000, and will be a projected (by the U.S. Census Bureau ) 20% of the population by 2030. A society with relatively more children, like the United States in the 1960s, will have greater demand for goods and services like tricycles and day care facilities. A society with relatively more elderly persons, as the United States is projected to have by 2030, has a higher demand for nursing homes and hearing aids. Similarly, changes in the size of the population can affect the demand for housing and many other goods. Each of these changes in demand will be shown as a shift in the demand curve.

The demand for a product can also be affected by changes in the prices of related goods such as substitutes or complements. A substitute    is a good or service that can be used in place of another good or service. As electronic books, like this one, become more available, you would expect to see a decrease in demand for traditional printed books. A lower price for a substitute decreases demand for the other product. For example, in recent years as the price of tablet computers has fallen, the quantity demanded has increased (because of the law of demand). Since people are purchasing tablets, there has been a decrease in demand for laptops, which can be shown graphically as a leftward shift in the demand curve for laptops. A higher price for a substitute good has the reverse effect.

Other goods are complements    for each other, meaning that the goods are often used together, because consumption of one good tends to enhance consumption of the other. Examples include breakfast cereal and milk; notebooks and pens or pencils, golf balls and golf clubs; gasoline and sport utility vehicles; and the five-way combination of bacon, lettuce, tomato, mayonnaise, and bread. If the price of golf clubs rises, since the quantity demanded of golf clubs falls (because of the law of demand), demand for a complement good like golf balls decreases, too. Similarly, a higher price for skis would shift the demand curve for a complement good like ski resort trips to the left, while a lower price for a complement has the reverse effect.

Questions & Answers

ceteris paribus means what
Neha Reply
ceteris paribus Kya kuch samjh nahi aa raha
Neha
All things remain the same
Rudy
means
Neha
In Economics, we represent real world with simple models. It is used to rule out effects of other independent variables to dependent variable.
Rudy
Sir i don't understand
Neha
please tell me answer in simple language
Neha
To make it simple, say for example demand for pizza. Its demand is affected by its price, consumer preferences, price of other food, say burger. Now, if we want to see the impact of lowering price to the demand of pizza, these variables will have its individual effect to the demand of pizza.
Rudy
This is where the ceteris paribus assumption will be applied. Impact of lowering its price to its demand, holding the effect of the consumer preferences and price of burger to nothing.
Rudy
what factor affect the demand
Neha Reply
Price
Rudy
only price sir
Neha
No sir a alot, like price of other goods, consumer preferences, etc
Rudy
thank you so much sir
Neha
You're welcome
Rudy
how to calculate opportunity cost
Vernon Reply
what is supply
Ntwanano Reply
Supply is a fundamental economic concept that describes the total amount of a specific good or service that is available to consumers.
DNA
what price elasticity
Anarfi
how can they any questions in the GCE
Bahbit Reply
the following table shows the cost and revenue data for Molly the monopolistic
Chasha Reply
if the budget line is multiple how do indicate the feasible one?
aminu Reply
economic is a dash science
Yasir Reply
Economics is a social science
Azka
economics is not social science
AZ
economice is a culture science?
Yasir
There are dash factors of production
Yasir
prefectly elastic demandis equal to dash?
Yasir
study related to what ought to be is termed as dash analysis?
Yasir
Whearas economics is a purely social science according to the Austrian School of Economics
Omkar
economic is a social science
falodun
economics is a social science
Anarfi
Economics is...... How to utilise scarce resources so that our unlimited wants are satisfied
Danish Reply
what is economics
Emmanuel Reply
economics is a science in which we can study problems related to human 's resources,need,lives, financial condition etc.
Sharma
Economic is the social science that studies the production, distribution, and consumption of goods and services. Economics focuses on the behavior and interactions of economic agents and how economies work.
Malaika
economics is that kind of subject which solve the economic problems like problem of scare resources center problem of an economy ( what how and from whome to produce) problem of inflation , deflation unemployment problem and other economic problems
Wani
Economics is the study of how society allocates it's scarce resources to fill their endless wants(according to Chicago school of Economics)
Omkar
Economics is the study of human action and its effects on other individuals and furthermore, society as a whole(Austrian School of Economics)
Omkar
The aggregation of the agents which interact in the form of economic activities is known as an economy
Omkar
name and explain the two rules of profit maximization
Esihle Reply
what is,elasticity
Onome Reply
Marginal utility of money remains the same. it is the assumption of
Anas Reply
Marginal utility of money remains the same. it is the assumption
Anas
Marginal utility of money remains the same. it is the assumption
Anas
marginal utility of money remains constant and as it is the worth of money , therefore it is assumed or we can say ,it is defined by the consumer himself...
mir
Marshall's demand theory
Avnish
Equilibrium of price is one at which the amount demand is exactly equal to the amount supplied explain
Mirza Reply
tell me the author or book name
Rida Reply

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Source:  OpenStax, Microeconomics. OpenStax CNX. Aug 03, 2014 Download for free at http://legacy.cnx.org/content/col11627/1.10
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