Movement Along a Demand Curve - Video Tutorials & Practice Problems
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Shifting Demand - Warning!
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Alright. So now we're going to discuss some of the things that can cause demand to change. So if there's gonna be certain events that cause shifts in our graph, our demand line might move from where it originally was. And I want to make a big bold warning right quick that a change in price is not going to shift the demand curve. We're only going to move along the demand curve, not shift and draw a whole new curve. Cool. So let's let me show you an example on these graphs real quick. So we've got um on the left, we're going to discuss a change in price. And on the right, we're going to talk about other determinants of demand. When I say determinant, it's some thing that determines demand, right? What makes demand, what it is. It's other factors that we're going to discuss. These other things that happen in the background. But first let's talk about this change in price. So remember first things first let's label our axis. We've got price here and quantity here, right, alphabetical order, PQ left to right, Okay. And let's go ahead. And just without without numbers, we are going to use um some terminology here that I put in the middle P. One and Q. One when we use this P. One. And cue on that that means we're that's the original situation and then P. Two. And cute is what happened after we made the change. So let me show you on the graph what I mean by that. So let's say we started here on the graph. He's read um at this point right here where we demanded quantity, one at a price of P one right? Whatever price that was and whatever quantity that was. We're gonna do a lot of our analysis like this without numbers. Um So we started at that price but let's say the price increased here to P. Two. Nothing else changed, Remember Citrus paradise? Nothing changed here except the price. So what's gonna happen? We're at this new price here and this new quantity here, right? We didn't draw a new demand curve. All that happened was there was this decrease in quantity demanded? So the quantity demanded decreased because the price increased. Right? So this is a distinction that we're trying to make and I'm trying to make clear to you right now that there's gonna be a difference when we have a change in price rather than a change in one of these other determinants. And we're gonna discuss every determinant in detail coming up. But as an example let's say consumer income change, right? Or even easier preferences, let's say that consumers prefer this. Good now they rather have this good to something else and we're gonna discuss that in more detail. But let's say they want this good more we're gonna shift this graph to the right, okay we're gonna have this new notice. I drew a new demand curve here and this is an increase in. Let me do it. Yeah I like this. It's gonna have this one in blue and the other one in red. Um So this is an increase in an increase in demand, not an increase in quantity demanded because notice the price isn't what's changing here, Something else other than price is changing. So let's say we were at this price right here again let's label our axes P. And Q. Were at this price P. One. And we were at this quantity demanded Q1. And notice not the price didn't change here. But what happened is now excuse me at the same price, I want to go the other way on the graph at this same price our quantity demanded is much higher. Right? So over here on the left hand side um on the left hand side we had a change in the price and a change in the quantity demanded right here noticed the price stayed the same but the quantity demanded went way up at that price. You understand? So it's because we have a new demand curve that we drew. So we had here we'll call this D. One for the first demand curve and D. Two for the second demand curve. Right? So notice in this situation we drew a new curve. So it's an increase or decrease in demand. Kids get this wrong all the time. Right? This is a huge confusion point. Uh for a lot of students so just take a second to hammer this in and you might even want to come back to this lesson after you understand all the changes in demand. But I did want to point this out first, just so you have it in your head and I have this point at the bottom here. All else equal. All else not equal, Right? So here in the change in price, everything else is staying the same. The only thing that's changing is price, right? And we're affecting our price. So we're affecting our quantity demand. And here um I just wanted to make a point that we are still holding our paradise conditions even on the right where I have all else not equal. The idea is everything else is staying equal. Except this one thing that's changing, we're still holding everything else equal. So para still holds in this case, there's just one thing that's changing, such as the income of the consumer or the preferences of the consumer, something like that. Cool, Alright, so I'm gonna end this video right now, and then we will continue on the bottom of the page. Let's do it