Shifts_in_demand

Shifts in demand

The position of the demand curve will shift to the left or right following a change in an underlying determinant of demand.

Increases in demand are shown by a shift to the right in the demand curve. This shift could be caused by a number of factors, including a rise in income, a rise in the price of a substitute or a fall in the price of a complement.

Demand schedule

A shift in demand to the right means an increase in the quantity demanded at every price. For example, if drinking cola becomes more fashionable demand will increase at every price.

PRICE (£)	ORIGINAL Qd	NEW Qd
1.10	0	100
1.00	100	200
90	200	300
80	300	400
70	400	500
60	500	600
50	600	700
40	700	800
30	800	900

Increases in demand

An increase in demand can be illustrated by a shift in the demand curve to the right.

Increase in demand for cola

Decreases in demand

Conversely, demand can decrease and cause a shift to the left of the demand curve for a number of reasons, including a fall in income, assuming the good is a normal good, a fall in the price of a substitute and a rise in the price of a complement.

Demand schedule

For example, if the price of a substitute, such as fizzy orange, falls, then less cola is demanded at each price, as consumers switch to the substitute.