Post on 24-Feb-2016
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Reading Quiz
1. Name two factors that can shift the demand curve
2. Name one “complement” to hamburgers.
3. What is a consumer’s “taste”?
4. When money income increases, does demand for normal goods increase or decrease?
Changes in Demand
Chapter 4.3
Warm-Up
From the clip of the movie, Hudsucker Proxy, describe how the demand of the hula hoop changed over time.
Consider:• What factors changed demand?• How did a change in demand change in
price?
Shifts in Demand Curve
• The Demand Curve shifts OUTWARD when demand increases.
• The Demand Curve shifts INWARD when demand decreases
Scenario 1
People find out that frozen yogurt has significantly less fat, sugar, and calories than regular ice cream.
What happens to the demand for ice cream?
Why?
Change in Consumer Taste
A change in the taste of a particular good shifts the
demand curve.
Scenario 2
Every Google employee gets a huge bonus of $5,000 at the end of the year.
What happens to the employees’ demand for dumb phones?
Change in Consumer Income
As money income increases, demand for
inferior goods decreases.
Scenario 3
LA Fitness is going to raise its membership prices at the beginning of 2014.
What happens to the demand for LA fitness membership in 2013?
Why?
Change in Consumer Expectations
A change in consumers’ expectations of price
shifts demand.
Scenario 4
A huge percentage of the population turns 18.
What will happen to the demand for lottery tickets?
Why?
Change in Consumer Population
A growth in population will increase the number
of consumers who demand a particular
good.
Scenario 5
Car prices raise significantly because of the cost of metal.
What will happen to the demand for tires?
Why?
Change in Prices of Related Goods
An increase in the price of one good will decrease
the demand of its complement
(related good).
Scenario 6
The price of apples at the store increases from $2/lb to $3/lb.
What happens to the demand for oranges?
Why?
Change in Price of Related Good
An increase in the price of one good will increase
the demand of its substitute (similar good).
Scenario 7
The amount of taxes American families must pay decreases in 2014.
What happens to the demand of plane tickets?
Why?
Change in Consumer Income
An increase in consumers’ real income will increase demand for
normal goods.
Scenario 8
PlayStation announces that it is about to release the PS5, selling for $500.
What happens to the demand for the PS4, which costs $400?
Why?
Change in Consumer Expectations
A change in the consumers’ expectations of price will change the
demand.
Scenario 9
Beyoncé becomes the face of L’oreal.
What happens to the demand for L’oreal’s hair dye, Feria?
Why?
Change in Consumer Taste
A change in the taste of a particular good shifts the
demand curve.
Scenario 10
There is a shortage of beef due to an outbreak of salmonella, raising the price of hamburgers.
What happens to the demand of French fries?
Why?
Change in Price of Related Good
An increase in the price of one good will decrease
the demand of its complement
(related good).