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Movements along the demand curve and shifts in the demand curve
Terms in this set (11)
non-price determinants of demand
all factors affecting demand other than price; they cause the entire demand curve to shift.
name the non-price determinants
- number of consumers
- price of related goods -> complements and substitutes
- taste and preferences
- future expectations (speculation)
refer to the entire demand curve of a good or service
refers to a specific quantity purchased by consumers at a specific price. It is a number, represented by Q on the horizontal axis of a market graph.
movement along the demand curve - changes in price
whenever the price of a good changes (ceteris paribus) it leads to a movement along the demand curve of that good.
point moving downwards on the demand curve?
as the price goes from P1 to P2 which is lower, the quantity demanded increases and causes the point to go downwards along the demand curve.
point moving upwards on the demand curve?
as the price goes from P1 to P3 which is higher, the quantity demanded decreases and causes the point to go upwards along the demand curve.
shift in the demand curve - changes in factors other than price
a change in any other factor that is not the price of the good itself is called a non-price determinant and will result in a shift of the entire demand curve.
effect of increased income (as a non-price determinant) on the demand curve
- increase - as people will have more money and the price would be the same, demand for the product increases
- shifts outwards
effect of decreased income (as a non-price determinant) on the demand curve
- decrease - as people will have less money and the price would be the same, demand for the product decreases
- shifts inwards
shifts in the demand curve
shows an increase or decrease in demand because, at every price of the product, consumers will now be willing and able to buy more or less of them.
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