Shifting Demand
First we are going to look at the procedure for shifting demand.
In subsequent sections we will look at the factors that shift demand.
The last section on demand will show how a demand works and the expected
outcomes. Here is how you would evaluate how a factor would cause
demand to shift:
-
Draw a supply and demand diagram and indicate the equilibrium output
by drawing a price line (from the intersection to the vertical axis) and
an output line (from the intersection to the horizontal axis).
-
Holding the price constant ask yourself if the event would cause people
to buy more or less of the good at that price. If they would buy
more, then demand increases and the demand curve shifts to the right.
If they would buy less, then demand decreases and the demand curve shifts
to the left.
-
Find the new intersection of supply and demand and indicate the new
equilibrium point as you did in step 1.
This is how changes in non- price factors would cause the demand curve
to shift. We will now look at those factors that shift demand.
