24/08/15
Lesson 2: Demand cont.
Learning Objective: I can distinguish between a shift of a demand curve and a movement along a demand curve.
DA: The law of demand states that as the price of a product falls, the quantity demanded of the product will usually increase. Use an example to explain this concept.
Review the concept of normal and inferior good and complete HW/activity.
REMEMBER, a change in price leads to a movement along the demand curve whereas a change in one of the non-price determinants will result in a shift right or left.
The non-price determinants of demand: Factors that determine demand and lead to an actual shift of the demand curve, left or right.
1. Income: Change in income affects demand for normal and inferior goods
DA: The law of demand states that as the price of a product falls, the quantity demanded of the product will usually increase. Use an example to explain this concept.
Review the concept of normal and inferior good and complete HW/activity.
REMEMBER, a change in price leads to a movement along the demand curve whereas a change in one of the non-price determinants will result in a shift right or left.
The non-price determinants of demand: Factors that determine demand and lead to an actual shift of the demand curve, left or right.
1. Income: Change in income affects demand for normal and inferior goods
- Normal goods: As income rises, the demand for the product will also rise. As illustrated in figure 2.2, an increase in income shifts the demand curve for air travel to the right, so more is demanded at every price
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- Complements: Products which are often purchased together, such as printers and ink cartridges. For example, a fall in the price of xbox's will lead to an increase in the quantity demanded for xbox games.
3. Tastes & Preferences: Marketing or advertising campaigns can increase our demand for certain pruducts, thus shifting the demand curve to the right.
4. Other Factors:
4. Other Factors:
- Size of population
- Changes in the age structure of the population
- Changes in income distribution
- Government policy changes
- Season changes