Economics » Demand and Supply » Shifts in Demand and Supply for Goods and Services

Summing Up Factors That Change Demand

Summing Up Factors That Change Demand

Six factors that can shift demand curves are summarized in this figure. The direction of the arrows indicates whether the demand curve shifts represent an increase in demand or a decrease in demand. Notice that a change in the price of the good or service itself is not listed among the factors that can shift a demand curve. A change in the price of a good or service causes a movement along a specific demand curve, and it typically leads to some change in the quantity demanded, but it does not shift the demand curve.

Factors That Shift Demand Curves

The graph on the left lists events that could lead to increased demand. The graph on the right lists events that could lead to decreased demand.

(a) A list of factors that can cause an increase in demand from D0 to D1. (b) The same factors, if their direction is reversed, can cause a decrease in demand from D0 to D1.

When a demand curve shifts, it will then intersect with a given supply curve at a different equilibrium price and quantity. We are, however, getting ahead of our story. Before discussing how changes in demand can affect equilibrium price and quantity, we first need to discuss shifts in supply curves.

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