Ch4 - factors that may shift the demand curve

• Advertising

  • Businesses try to influence demand for their products through advertising and other forms of promotion
• Increase in advertising expenditure

  • The demand will increase
  • There will be a shift of the demand curve to the right from D1 to D2
  • The quantity demanded will increase
• Normal goods

  Goods for which demand will increase (fall) if income rises (falls)
• Inferior goods


  Goods for which demand will fall (rise) if income rises (falls)
• Increase in disposable income for normal goods

  • The demand will increase
  • There will be a shift of the demand curve to the right from D1 to D2
  • The quantity demanded will increase
• Increase in disposable income for inferior goods

  • The demand will fall
  • There will be a shift of the demand curve to the left from D1 to D3
  • The quantity demanded will fall/decrease
• Fashion and tastes

  • The clothes industry is influenced by changes in fashion
  • Fashion and tastes may be influenced by social changes
• Social changes influencing fashion and tastes

  • People have developed a keen interest in social media
  • Social media such as Facebook, Twitter have seen a huge increase in demand since launch
• Substitute goods

  Goods that are bought as an alternative to another but perform the same function
• Substitute goods

  • Coca-Cola and Pepsi
• If the price of substitute good falls

  • The demand will fall
  • There will be a shift of the demand curve to the left from D1 to D3
  • The quantity demanded will fall/decrease
• Complementary goods

  Goods that are purchased together because they are consumed together
• Complementary goods

  • Consumers of cornflakes will also buy milk
  • People who buy cars will also buy car insurance
• If the price of complementary good rises

  • The demand will fall
  • There will be a shift of the demand curve to the left from D1 to D3
  • The quantity demanded will fall/decrease
• Demographic changes

  • If the size of population grows, there will be an increase in demand for most goods and services
  • Age distribution of a population is likely to affect demand patterns
  • Gender distribution of a population is likely to affect demand patterns
  • Geographical distribution may affect demand
  • Ethnic groups in the population structure may affect demand
• Size of population grows

  The demand will increase
• More elderly

  The demand for retirement home, health care product will increase
• More women than men

  There will be a greater demand for women's clothes than men's clothes
• Factors that may shift the demand curve (AIDSFC)

  • advertising
  • income
  • demographic changes
  • price of substitute goods
  • fashion and tastes
  • price of complementary goods