Summary of Demand Changes
So changes in demand can be summarized as this:
-
An increase in demand shifts the demand curve to the right causing both
price and quantity to increase.
-
A decrease in demand shifts the demand curve to the left causing both
price and quantity to decrease.
There are also situations which push demand in opposite directions at
the same time. For example moving from the winter months to the summer
months pushes the demand for condensed soups down. However, there
may also be an increase in income at the same time. Since condensed
soup is a normal good we would expect demand to increase. We have
two effects pushing demand in different directions. The outcome of
these dual effects are dependent upon which movement is larger. Without
statistical information to evaluate the strength of the individual movements
we can not determine the final outcome in the market for condensed soup.
