Shifts in Demand

Factors affecting shifts in demand, substitutes, complements, seasons, fashion and trends, advertising, income, population and age structure

What are the 6 main factors that would cause a shift in demand?

• Population and age structure

• Price of other goods (sub/comp)

• Season

• Advertising

• Trends and fashion

• Income

What causes shifts in demand?

Changes in any other factor than price.

How does Population and Age Structure cause a shift in demand?

If the population increases or decreases, there is a natural increase and decrease in demand for products.
However, this also depends on the age structure of the population. If there is a larger percentage of the population that are old, demand for video games would decrease and demand for mobility scooters may increase,

How does Trends and Fashion cause a shift in demand?

Trends shift demand by changing consumer tastes, preferences, and fashions. This is often influenced by advertising.

How does Price of other goods cause a shift in demand?

When the price of another good goes up or down, depending on whether it is a substitute or complement, we will see an increase in demand of Good A or decrease.

• Increase in substitute = Increase in Good A

• Increase in complement = Decrease in Good A

How does Advertising cause a shift in demand?

Advertising changes a populations view on the product or can get the word around about it. This will shift demand right.

How does Seasons cause a shift in demand?

As seasons change, different products are in demand. You need sunscreen in summer but not so much in the winter therefore demand increases and decreases depending on the time of year.

How does Income cause a shift in demand?

When people have a higher income, they are able to afford normal goods. However, when incomes again decrease, they go back to inferior goods.

Inferior goods= Incomes increase→ demand decrease. Incomes decrease → Demand increase

Normal goods= Incomes increase → demand increase. Incomes decrease → Demand decrease

What causes a movement along the demand curve?

Changes in price cause extensions/contractions in demand.

What are Complementary goods?

Goods that are bought and used together

Printer, printer ink

Tennis racket, tennis balls

Iphone, Iphone apps

What are Substitute goods?

Similar goods that can be switched for each other.

Samsung, iPhone

Electric car, Diesel car