Question :-
● State the reason why sometimes the demand- curve graph shifts.
● Show an example on graph.
Note :-
Do not answer if you don't know the concept
Do not copy from any site
Answers
- Sometimes demand curve shifts due to change in price if prices will rise demand will low and curve will shift leftward ehereas if price decreses then rightward more demand.
Concepts
Let's return to basics. The attachment is included in the first picture.
Firstly, the graph in Economy is different from those in Math. The graphs in Math are read according to the horizontal axis; In Economy, the graphs are read according to the vertical axis. The graph in Economy reads per price, which is the vertical axis.
In the graph, we see that the direction of the arrow is upwards, which is a price increase. The quantity is decreased as the price increased.
Now we know the basics. Let's get started.
Solution
Demand Curve
Let's first consider the demand curve. What are some examples in this category? The five examples are the following, and this is the second diagram.
- Income and normal or inferior goods.
→ As income increases, people will prefer their car to public transport. In this situation, the car is normal goods; The public transport is inferior goods.
- The change in prices of substitutes and complements
→ A good example of substitutes is Coke and Pepsi. Instead of one, we can use the other. If the price of one increases, the demand for the other will increase because it is cheaper.
An example of complements is computer and software. Both complement each other. If the price of a computer increased, the demand for software decreases.
- Taste
→ A change in taste results in a change in demand.
- The expectation in future cost
→ If the consumers expect the change in the market, they will choose either to buy or not.
- The number of consumers
→ If there are enough consumers, the demand increases.
Supply Curve
Here are four examples, and this is the third diagram.
- Factor cost
→ If the price for factors changed, this results in a change in total price.
- Advance in technology
→ If technology advanced, the quantity of products increases. This increases supply.
- The expectation in future cost
→ If consumers expect the increment of price, they will choose either to buy or not.
- The number of suppliers
→ As there are more and more suppliers, there is an increment in supply.