Shift
in demand:
When there are changes in factors other than a good’s own price which effect
the quantity purchased, we call these changes shift in demand.
Demand
increases when the quantity demanded at each price increases, and when the
demand decreases the quantity demanded at each price decreases.
An
example of how a change in a non-price variable shifts the demand curve is as
follows:-
Example: We know that
the average income of Americans rose sharply during the long economic boom of
the 1990s. Because there is a powerful income effect on the demand for
automobiles demanded at each price rise.
For
example, if the average income rose by 10 percent, the quantity demand at each
price of $10,000 might rise from 10 million to 12 million units. This would be
a shift in the demand curve because the increase in quantity demanded reflects
factors other than the good’s own price. The net effect of the changes in under
lying influences is what we call an increase in demand.
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