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Changes in Demand

A change in demand refers to the demand curve shifting left or right due to a change in the relationship between the price of a product and the quantity demanded. 

There are several factors that change demand. You will have to memorize and understand these in order to do well on the test. 

What changes demand:

  • Expected future prices
  • Income
  • Prices of related goods
  • Consumer tastes
  • Number of buyers 

If the price of white sneakers is $10 this year but Chad expects the price to increase in the future, he is going to stock up on sneakers while the price is low. If everyone expects the price to go up in the future, they will do the same which increases demand. 

If the price of white sneakers is $200 and everyone expects the price to go down in the future, they will wait to buy white sneakers until next year which lowers demand and shifts it to the left. 

If Chad's income were to increase significantly, he would be willing to buy more white sneakers at any given price. This would cause the demand curve to shift to the right.

If Chad’s income were to decrease significantly, he would be willing to buy less white sneakers at any given price shifting the demand curve to the left. Both these scenarios are shown below.

Substitute goods

Chad is shopping for white sneakers when he finds out that all black sneakers are on sale for a fraction of the price of white sneakers. White sneakers and black sneakers are essentially the same thing so he decides to buy the black sneakers. 

This would lower the demand for white sneakers and shift the demand curve to the left. Why?

Black sneakers would be considered a substitute for white sneakers.

A substitute good is a product or service that consumers see as essentially the same or similar-enough to another product. 

If the price of a substitute good decreases (black sneakers on sale), the demand for white sneakers decreases because people would rather buy the black sneakers. 

If the price of a substitute good increases (black sneakers are more expensive), the demand for white sneakers increases because everyone who is buying black sneakers will switch to the white sneaker market. 

Complementary goods

Many products are not consumed alone. For example, when you buy chips you also need to buy salsa, when you buy a hotdog you also have to buy a bun, when you buy a car you also have to buy gas. 

These are all examples of complementary goods.

A complementary good is a product used in combination with another product. When paired together both goods have more value. 

The price of one complementary good affects the demand for the other good. For example, if the price of hotdogs increased, people would buy less hotdogs which in turn means they would buy less buns. This lowers the demand for buns.

If the price of hotdogs decreased people would buy more hotdogs which in turn means they would buy more buns. In this scenario, a decrease in the price of a complementary good increases the demand for buns. 

Consumer tastes also affect the demand for a good. If every single one of the the Kardashians only wore white sneakers, white sneakers would in style and demand would increase. This would cause the demand curve to shift to the right. 

If all the Kardashians said white sneakers were out of style, consumers would think the same and demand would decrease. 


If the population increases, then there are more people demanding goods and services. This increases demand and shifts the demand curve to the right.

If the population decreases, then there are less people demanding goods and services. This causes demand to decrease and shift the demand curve to the left.