Shift in demand curve
Also called: Increase and decrease in demand, Change in demand, increase or decrease in demand · Topic: Consumer Behaviour, Demand and Elasticity · NCERT: Class 12, Ch 2 "Theory of Consumer Behaviour"; Class 12, Ch 5 "Market Equilibrium"
Meaning
A shift in the demand curve means the whole curve moves to a new position. This happens when a factor other than the good's own price changes. Such factors include income, prices of related goods, tastes, population, season and expectations about future prices. A rightward shift is called an increase in demand, because more is bought at every price. A leftward shift is called a decrease in demand, because less is bought at every price.
Example
In summer, people buy more ice-cream at every price, so the demand curve for ice-cream shifts right. If news says cold drinks may harm health, their demand curve shifts left. A rise in income shifts the curve of a normal good to the right. For an inferior good such as coarse grains, the same rise in income shifts the curve to the left.
Don't confuse with
- Movement along the demand curve: the quantity changes only because the good's own price changed, and the buyer stays on the same curve. This is called extension (price falls, more is bought) or contraction (price rises, less is bought). It is not an increase or decrease in demand.
Related concepts
- Determinants of demand
- Related goods
- Substitute goods
- Complementary goods
- Consumer income
- Purchasing power
- Future price expectations
- Population size and composition
- Movement along the demand curve