Demand in Economics How the consumer influences how I make money Law of Demand

Non-Price Factors that effect Demand

• These factors will cause the demand curve to shift to the left (less quantity demanded) or to the right (more quantity demanded)

Change in Demand: Recently, Farley High School changed boys hockey from a varsity sport to an intramural sport. As a result, they needed to buy fewer hockey pucks. The decrease in demand is shown by a shifting demand curve.

1. Change in Income

• As people earn more money, the demand for luxury goods will increase
• As people earn less money, the demand for luxury goods will decrease
• Ex. If I win the lottery, I’ll buy a Jaguar
• If I get laid off, I’ll take the bus

2. Substitution Effect

• If there is a substitute product, demand for an item may be influenced by the price of the substitute
• Ex. If the price of butter goes up, people will substitute margarine.

3. Complimentary Products

• The demand for an item will increase or decrease if the price of a complimentary product (something that goes with it) increases or decreases
• Ex. If the price of hot dogs goes up, the demand for hot dogs goes down, thereby decreasing the demand for hot dog buns

4. Change in Attitudes

• As people’s attitudes about products change, so does the demand
• Ex. Fashion, music, food

How does Scarcity affect Demand?

• If there is a scarcity of an item, the demand goes up.
• Ex. Gasoline

How does a boycott affect demand?

• If an item is being boycotted, there is little to no demand for the item.
• Ex. During the Montgomery bus boycott, there was little or no demand for the Montgomery bus system.

How does the War in Afghanistan affect demand?

• Increased demand for war-related resources
• Ex. Metal (bullets, vehicles), cloth (uniforms), gas masks
• Increased demand for news
• Ex. News interruptions during television shows, new news stations, internet sites.