Shift of A Demand Curve
The shift of a demand curve takes place when there is a change in any non-price determinant of demand, resulting in a new demand curve. Non-price determinants of demand are those things that will cause demand to change even if prices remain the same—in other words, the things whose changes might cause a consumer to buy more or less of a good even if the good's own price remained unchanged. Some of the more important factors are the prices of related goods (both substitutes and complements), income, population, and expectations. However, demand is the willingness and ability of a consumer to purchase a good under the prevailing circumstances; so, any circumstance that affects the consumer's willingness or ability to buy the good or service in question can be a non-price determinant of demand. As an example, weather could be a factor in the demand for beer at a baseball game.
When income rises, the demand curve for normal goods shifts outward as more will be demanded at all prices, while the demand curve for inferior goods shifts inward due to the increased attainability of superior substitutes. With respect to related goods, when the price of a good (e.g. a hamburger) rises, the demand curve for substitute goods (e.g. chicken) shifts out, while the demand curve for complementary goods (e.g. tomato sauce) shifts in (i.e. there is more demand for substitute goods as they become more attractive in terms of value for money, while demand for complementary goods contracts in response to the contraction of quantity demanded of the underlying good).
Read more about this topic: Demand Curve
Famous quotes containing the words shift, demand and/or curve:
“Ghosts, we hope, may be always with us—that is, never too far out of the reach of fancy. On the whole, it would seem they adapt themselves well, perhaps better than we do, to changing world conditions—they enlarge their domain, shift their hold on our nerves, and, dispossessed of one habitat, set up house in another. The universal battiness of our century looks like providing them with a propitious climate ...”
—Elizabeth Bowen (1899–1973)
“We are well advised to keep on nodding terms with the people we used to be, whether we find them attractive company or not. Otherwise they turn up unannounced and surprise us, come hammering on the mind’s door at 4am of a bad night and demand to know who deserted them, who betrayed them, who is going to make amends. We forget all too soon the things we thought we could never forget.”
—Joan Didion (b. 1934)
“The years-heired feature that can
In curve and voice and eye
Despise the human span
Of durance—that is I;
The eternal thing in man,
That heeds no call to die.”
—Thomas Hardy (1840–1928)