Changes in Demand

Flashcards based on key concepts from the lecture about changes in demand, including definitions and relevant economic factors.

Changes in Demand

Can be categorized into price factors (movement along demand) and non-price factors (shift in demand).

Movement along Demand

A change in quantity demanded due to a change in price, resulting in either extension or contraction in demand.

Extension in Demand

A downward movement along the demand curve due to a fall in price, leading to an increase in quantity demanded.

Contraction in Demand

An upward movement along the demand curve due to an increase in price, resulting in a decrease in quantity demanded.

Movement of the Demand Curve (Shift in Demand)

Occurs due to changes in non-price factors, leading to either an increase in demand or decrease in demand.

Increase in Demand

The demand curve shifts to the right, indicating that more will be demanded at every price.

Decrease in Demand

The demand curve shifts to the left, indicating that less will be demanded at every price.

Changes in Income

When consumer disposable income rises, consumers buy more goods and services, increasing demand.

Complementary Goods

Goods whose demand is linked; an increase in the price of one leads to a decrease in demand for its complementary goods.

Substitute Goods

Goods that can be used instead of another; an increase in price of one leads to an increase in demand for its substitutes.

Expected Future Prices

If the price of a good is expected to rise, consumers will increase demand today to avoid higher prices in the future.

Taste and Fashion

Changes in taste and fashion can increase demand for goods that are currently in trend.

Advertising

Aims to increase demand for advertised products; successful advertisements can lead to increased demand for the advertised product.

Population Changes

An increase in population will increase demand for goods and services, while a decrease will reduce demand.