Shift in the demand curve

A demand curve is a line or a curve showing the relationship between the quantity purchased and their respective prices. A normal demand curve will slope from the left to the right. This is said to be the demand curve for normal goods. There are exceptional like the demand curve for inferior goods or giffen goods that does not follow this principle. The demand curve for inferior goods for example will have a zero gradient since the changes in prices will not affect the quantity demanded from the market. The demand curve whether it is normal or abnormal has certain unique features. For example the demand curve can make some movements on the Cartesian planes when the various factors that influence the quantity demanded are varied. The movement can either be along the demand curve or movement away fro the original demand curve. Movement along the demand curve is referred to by economists as either expansion or contraction. The upwards movement along the demand curve is called contraction and the downwards movement along the demand curve is called expansion. Movement along the demand curve is caused only by changes in commodities prices.

Our main interest on the movement of demand curves is the shift in the demand curve. The shift in demand curve is caused by the other factors that influence demand apart from the price changes. For the shift in demand curve to occur all the other factors must be changing but the prices has to remain the same. The shift in the demand is referred to as a change in consumers demand. The major factors that result to the shift in demand curve are; changes in the consumer’s income, changes in consumer’s expectation or speculation, changes in the prices or related goods related goods can be grouped as either complimentary goods or substitute’s goods. Complimentary goods are goods that are consumed together. One good cannot be used on its own. An example is car and fuel. Substitute goods are goods that are used to satisfy the same need or want. The last major factor that results to a shift in demand curve is the changes in consumer’s tastes and preference.

An increase in consumer’s income will cause two types of changes depending of the type of goods being purchased by the consumers. When an increase in the consumers income results in an upwards shift on the demand curve that type of good is referred to as a normal goods. It means that increase in consumer’s purchasing power increases the demand for that commodity. The second type of good is an inferior good. An increase in consumer’s wealth will reduce the quantity demanded from that commodity. It means that consumers will only purchase that product under budget constraints. Taste and preference is another factor that results to a shift in demand curve. Loss in consumers taste and preference for ac certain commodity will result to a downward movement of demand curve. Fashion is an example that result to either loss or increase in preference for a commodity. The demand curve for a good that is in fashion will shift upwards provide prices are kept constant

Be Sociable, Share!

{ 1 comment… read it below or add one }

antwi December 17, 2015 at 11:12 pm

Well digested.tanx


Leave a Comment