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Saturday, 19 May 2018

Shift in Demand curve

shift in demand curve
Shift in demand curve

*      Shift in demand means change in demand not change in quantity demanded.
*      Shift may be rightward or leftward due to changes in other factors of demand, own price of commodity remains constant.
*      Other factors such as prices of substitute and complementary goods, income of buyer, taste and preference, population size/ composition cause in change of demand in this case.
*      let us discuss with example of tea. Coffee is a substitute of tea. If price of coffee will decrease in market then some consumer of tea will move to coffee therefore demand of tea will decrease and consequently demand curve will be shifted to left. If price of coffee will increase, demand for tea will increase and demand curve will be shifted to right.
*      When we talk about income factor, it is studied with reference to two types of goods, inferior and normal. In case of normal goods, demand curve shifts to right when income income is increased of a buyer and vice versa.
*      In case of inferior goods, demand curve shift to left when income is increased of a buyer and vice versa. 
*      The reason behind this phenomena i.e income effect on normal and inferior goods is based on a human behavior. A rational person moves to normal goods from inferior when income increases because he always want to improve his quality of life and when income decreases he is resorted to move from normal to inferior goods due to low income.
*      Taste and preference when is in favour of a commodity , demand curve shift to right and vice versa.
*      Population when increases , demand for commodities also increase and vice versa.
*      Composition of population means that population consists of children, young and old persons. If there are more old person then goods used by this category will be demanded more e.g. Sticks, medicines etc.

Thanks and Happy reading.

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