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Study Notes

Shifts in Market Demand

Level:
AS, A Level
Board:
AQA, Edexcel, OCR, IB
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This study note looks at the causes of shifts in market demand

Understanding Market Demand - Revision Video

Key summary

Give me 5 reasons why demand may increase (i.e. the demand curve shifts to the right)

  • Increasing income (for normal goods)
  • Decreasing income (for inferior goods)
  • Rising price of substitutes
  • Falling price of complements
  • Effective advertising

Give me 5 reasons why demand may decrease (i.e. the demand curve shifts to the left)

  • Change in consumer tastes and preferences away from the product
  • Rise in interest rates leading to a fall in demand for products bought on credit
  • Expected fall in prices leading consumers to delay their purchases
  • A rise in unemployment during a recession
  • A rise (appreciation) in the exchange rate which makes import (substitutes) cheaper
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