CHANGES IN DEMAND

Lesson objective
1. Identify the determinants of
demand and explain how a
change in each affects the
demand curve.
2. Distinguish between the
money price and the time
price of a good
 determinants of demand
1. CONSUMER INCOME
2. THE PRICES OF RELATED GOODS
3. THE NUMBER AND COMPOSITION OF CONSUMERS
4. CONSUMER EXPECTATIONS
5. CONSUMER TASTES

HOW DOES A CHANGE IN EACH AFFECT DEMAND?

 CHANGES IN NORMAL GOODS increases as money

CONSUMER income increases. Most goods are normal

goods.
INCOME Example;
Pizza is a normal good, its demand curve
WHEN MONEY INCOME shifts rightward when money income
INCREASES, THEN increases.
CONSUMERS ARE THEN
WILLING TO BUY INFERIOR GOODS decreases as money
income increases. As money income
MORE GOODS AT increases, consumers switch from these
EACH PRICE, SO inferior goods to normal goods
MARKET DEMAND Example:
INCREASES. Ukay-ukay clothing, jeepney rides, and
secondhand furniture
 CHANGES IN THE PRICES
OF RELATED GOODS
SUBSTITUTES - products that can be used in
place of each other.
Example: An increase in the price of
hamburgers prompts some consumers to
buy pizza.

COMPLEMENTS - certain goods are often

used in combination.
Example: pizza and soft drinks, milk and
cookies, computer and software, airline and
tickets
 CHANGES IN THE SIZE
OR COMPOSITION OF THE
POPULATION
IFTHE POPULATION GROWS, THE
NUMBER OF CONSUMERS IN THE
MARKET INCREASES, SO
DEMAND INCREASES.
 CHANGES IN CONSUMER EXPECTATIONS

A CHANGE IN CONSUMER EXPECTATIONS CAN SHIFT THE

DEMAND CURVE.

EXAMPLE:
CHANGE IN PRICE EXPECTATIONS - if you expect pizza
prices to jump next week, you may buy an extra one today.
 CHANGES IN CONSUMER TASTES

TASTES - are your likes and dislikes as a consumer.

EXAMPLE:

pizza with hot sauce, ketchup on a hotdog

 what are the five
determinants of demand?
how do changes in each
determinant shift the
demand curve?
 MOVEMENT ALONG A DEMAND CURVE
CHANGE IN QUANTITY DEMANDED RESULTING
FROM A CHANGE IN THE PRICE OF THE GOOD.

SHIFT OF A DEMAND CURVE

CHANGE IN ONE OF THE DETERMINANTS OF
DEMAND OTHER THAN PRICE CAUSES CHANGING
IN DEMAND.
THE ROLE OF TIME
IN DEMAND
 TIME AND DEMAND
CONSUMPTION INVOLVES A MONEY PRICE
AND TIME PRICE.

YOUR WILLINGNESS TO PAY MORE FOR

TIME-SAVING GOODS AND SERVICES
DEPENDS ON THE OPPORTUNITY COST OF
YOUR TIME.

EXAMPLE: PAY MORE FOR READY-TO-

EAT FOODS THAN PREPARE FOR
YOURSELF
 TEAMWORK
Each group would brainstorms a list of 3 TV
advertisements you believe are particularly
persuasive present in class.
And answer the following:
1. Explain how each is designed to shift
consumer demand curves for the product.
2. To which of the determinants of demand
do the ads appeal?