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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?
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Changes in Demand
Chapter 4.3
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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?
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Shifts in Demand Curve
• The Demand Curve shifts OUTWARD when demand increases.
• The Demand Curve shifts INWARD when demand decreases
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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?
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Change in Consumer Taste
A change in the taste of a particular good shifts the
demand curve.
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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?
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Change in Consumer Income
As money income increases, demand for
inferior goods decreases.
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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?
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Change in Consumer Expectations
A change in consumers’ expectations of price
shifts demand.
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Scenario 4
A huge percentage of the population turns 18.
What will happen to the demand for lottery tickets?
Why?
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Change in Consumer Population
A growth in population will increase the number
of consumers who demand a particular
good.
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Scenario 5
Car prices raise significantly because of the cost of metal.
What will happen to the demand for tires?
Why?
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Change in Prices of Related Goods
An increase in the price of one good will decrease
the demand of its complement
(related good).
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Scenario 6
The price of apples at the store increases from $2/lb to $3/lb.
What happens to the demand for oranges?
Why?
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Change in Price of Related Good
An increase in the price of one good will increase
the demand of its substitute (similar good).
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Scenario 7
The amount of taxes American families must pay decreases in 2014.
What happens to the demand of plane tickets?
Why?
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Change in Consumer Income
An increase in consumers’ real income will increase demand for
normal goods.
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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?
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Change in Consumer Expectations
A change in the consumers’ expectations of price will change the
demand.
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Scenario 9
Beyoncé becomes the face of L’oreal.
What happens to the demand for L’oreal’s hair dye, Feria?
Why?
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Change in Consumer Taste
A change in the taste of a particular good shifts the
demand curve.
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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?
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Change in Price of Related Good
An increase in the price of one good will decrease
the demand of its complement
(related good).