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:

  1. 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).
  2. 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.
  3. 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.
 

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