Summary
Highlights
A shift in the demand curve represents a change in demand at any given price. Factors causing shifts include changes in habits, fashions, tastes, income, prices of substitute goods, prices of complementary goods, population size, advertising, and the state of the economy.
Demand can shift to the left due to a decrease in population, changes in consumer preferences away from a product, or an economic recession leading to reduced consumer spending and confidence.
Demand is defined as the willingness and ability to pay for a product at a given price. Quantity demanded refers to the amount of a good or service demanded at each price level. The law of demand states that as price increases, quantity demanded decreases, and vice versa.
Individual demand is the demand from a single person for goods and services. Market demand is the total demand at different price points, summing the demand of every person in the economy.
The demand curve illustrates an inverse relationship between price and quantity. Higher prices lead to lower quantities demanded, and lower prices result in higher quantities demanded.
An extension of the demand curve is a rise in quantity demanded due to a fall in the product's price. A contraction is a fall in quantity demanded caused by a rise in the product's price. Price is the only factor that causes movements along the demand curve.