3. Supply and Demand
Shifting Demand
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Alright, so last I included this summary sheet that includes all the shifts in demand that we've covered so far, as well as information about changes in price. So first I listed all of the ones that are directly proportional. That means that the determinant is going to go up as well as the demand is going to go up and it makes this neat little acronym here in spec. I know some of you do well with acronyms and stuff like that, so I included it in here although I would really think that it's better to focus on the logic and the intuition when it comes to deciding which way things are gonna shift, but nonetheless this could be helpful for you as well so I included it in here. So here we've got all our directly proportional shifts, income and normal goods right, so if consumer income rises, demand for normal good rises. Substitute products, if the price of a substitute goes up, the demand for our good is going to go up. Preferences for a good, so if the preferences, if consumers prefer this good for some reason, the demand for that good is going to increase. Consumer expectations, so if the expected future price in the consumer's mind is gonna be higher, then they're gonna demand the good now more. So you're gonna see an increase in current demand there. And lastly, the number of consumers. So if you see the number of consumers in a market go up, you're also gonna see the demand for that product go up. Next, let's cover these inversely proportional ones. We've got this one unfortunately there's only 2 so I couldn't really make an acronym here, but that's why there's only 2. It should be easy to remember. So we've got income with inferior goods, so when consumer income rises, demand for inferior goods is gonna fall, right, and complements, when the price of a complement goes up, a complementary product, then the demand for our good is gonna fall. And last, I wanted to include this note about changes in price. Remember when we have a change in price, it's only gonna change the quantity demanded, right? We're not gonna draw a new demand curve. I know you see 2 curves there foreshadowing a little bit, the other one's gonna be the supply curve and we're gonna get into that in a minute, but what you see here is that we've moved on the demand curve say from this point here in the middle, we've moved up to that other point. Okay, so we've only moved along the line and not drawn an entirely new demand curve. Alright, cool. So I hope this sheet is really valuable to you and I think you should use it especially while you're still getting comfortable with the shifts, while you're doing practice problems, try and use this sheet to help you guide, to the correct answers. Cool? Alright, one more thing. You see all this empty space here on the right side of the page? I wonder what's gonna fill that up later. We'll have to see. Alright. Let's go.
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