Figure 3-3 Shifts in the Demand Curve
A rightward shift in the demand curve from to indicates an
increase in demand; a leftward shift from to indicates a decrease
in demand. An increase in demand means that more is demanded at each
price. A decrease in demand means that less is demanded at each price.
Let’s now consider five important causes of shifts in the demand curve.
- Consumers’ Income
If average income rises, consumers as a group can be expected to desire
more of most products, other things being equal. We therefore expect
that a rise in average consumer income shifts the demand curve for most
products to the right—an increase in demand. Such a shift is shown in
Figure 3-2.
Goods for which the quantity demanded increases when income rises are
called normal goods. This term reflects economists’ empirical finding that
the demand for most products increases when income rises.
D 0 D 1
D 0 D 2