Graphing Change to Demand

Demand is the quantity of a product that consumers are willing and able to purchase at each specific price in a series of possible prices during some specified period of time, all other things being equal (ceteris paribus).

However, when any of the ceteris paribus conditions (determinants) changes, the entire demand curve, which presents the inverse relationship between product price and quantity demanded on a simple graph, shifts. This shift is referred to as a change in demand as different to a change in the quantity demanded, which is movement along the same demand curve. This change in demand is caused by a change in determinants of demand: consumer preference, consumer income, prices of related goods, expectations of future prices, income, or availability, and population size including income and age distribution. A change in consumer's preference, possibly prompted by advertising or specific event, affect the entire demand curve; the more favorable change to a product, the more demand on that product. The impact of changes in income is vary, depending on whether a product is normal goods or inferior goods. Whether a change in the price of related good will increase or decrease the demand will depend on whether the related good is a substitute for, or a complement to, the product. For example, coffee and tea are substitute goods. If the price of coffee rises, consumer will purchase a smaller amount of coffee, causing the demand for tea to increase. Consumer future expectations about product prices, product availability, and future income can shift demand. For example, consumer expectations of higher future prices may prompt them to purchase more goods now, causing demand to shift to right. Conversely, expectation of falling price will tend to decrease the current demand for the goods. Clearly, an increase in the number of consumers in a market will constitute an increase in demand.

The following two graphs represent an example of a change in demand when the price of a related good is changed; when the price of coffee rises, the demand for tea increase. A change in one or more of the determinants of demand will cause a change in demand. An increase in demand shifts the demand curve to the right while a decrease in demand shifts the demand curve to the left.