Shift along the Demand Curve: Increase and Decrease Video Lecture | Microeconomics- Interaction between individual buyer-seller

hi my name is Mark and I teach economics
supply and demand is at the core of
economic analysis micro and macro the
demand curve which we're going to focus
on today is either a movement along or a
shift in the demand curve today we're
going to focus on the five shifters the
five shifters of the demand curve and
this is again it's different than moving
along a demand curve when you're
shifting a demand curve
it's ceteris paribus everything equal
price stays the same it's just simply
there's more demand or less demand for
the product and this is we're going to
look at and not only that I'll give you
a special trick on how to remember the
five shifters if you're taking an exam
if you're taking a test you'll find this
nowhere else on the web this is my
special trick on how to remember the
five shifters of the demand curve and
you know some people say learn the
theory and the shifting and the ideas
will come Maya is memorize memorize the
five shifters and then you'll be able to
use it in the examples you'll be able to
understand it better but you first have
to get this conceptual framework laid
down and then you can subsequently hang
facts and data on it and then you'll be
able to use it in everyday life believe
it or not you'll use this in everyday
life so stick around I'm going to show
you some slides on the five sisters of
the demand curve why the demand curve
shifts what it means what are the
influences and I've got some stories for
you here we go the purpose of this video
is to look into the five shifters of the
demand curve why does the demand curve
shift this is the question we're gonna
answer and I'm gonna show you a trick on
how to remember this for your test the
trick comes at the end what is an
increase in demand it is an increase in
a quantity demanded at any given price
this is a shift an increase in any
quantity demanded at any given price
this is what shifts the demand curve
it's not to be confused with a movement
along the demand curve which is a
different topic just understand when it
curves shifts it shifts to the right or
to the left let's take a look a shift
means
a greater demand at the same price so
the price is ceteris paribus it doesn't
change all things being equal for some
reason people start crowding around
demanding and wanting more of a
particular item or product we can speak
about in aggregate or individually but
right now let's just look at generally
why a demand curve shifts you have the
same price but people demand more so
it's still $25 but the quantity demanded
goes from 3 to 4 that's pretty clear and
whenever you see in the lower let's say
right hand corner left hand corner
things like D 1 D 2 you know that
sequentially D 2 obviously comes after D
1 another way of looking at it is this
shift shows a willingness a greater
willingness to pay for the same quantity
a higher price but most people look at
it from that price perspective that
price stays the same but I just wanted
to show you a flip of the converse there
are five shifters of the demand curve
and we're going to look at each one
income prices of related good tastes
population and demographics and
expectations about the future or at
least future prices you should be able
to memorize these and use an example a
lot of professors will be like well no
just understand a theory and then the
memory you'll just automatically know
you will not automatically remember it
you're gonna have to memorize it first
and then subsequently hang on data facts
examples in this conceptual framework
that you've built and that's the best
way good try it the other way but I
think memorizing it just having a quick
simple formula and I'll show you at the
end how to do that so before we get into
it the five shifters we need to just
understand there are some basic
differentiation between goods there's no
normal good and that's a good like
normal people would do and pay on a
normal basis and demand increases
when you're a good witch the man
increases when income increases that's
an example of a normal good you have
more money you want to buy more of it in
normal circumstance inferior you have
more money you want to buy less of it
substitute good you can substitute it
out it doesn't matter
I'll have this apples or bananas you
know I like both of them and a
complementary good ketchup and
hamburgers they kind of go together
we're going to talk about the first
thing is a income it's an income shifter
and this is on a normal good so say the
normal good we're talking about is a
Riley's Irish pub black angus steak fry
restaurant family restaurant you take
your family there let's say once a month
it's a normal good you have normal
income you're an average family with the
white picket fence and I don't know if
there's really no Riley's Irish pub but
I'm sure there's many of them in every
city in any town USA so when your income
Rises and you're feeling pretty good
about yourself you don't mind taking
your family there twice a month prices
stay the same at O'Reilly's what income
is rising either in aggregate or your
individual income so this is represented
by a shift to the right in the demand
curve on a normal good obviously if your
income decreases the curve shifts the
others the other way next thing is an
inferior good what is it inferior good
well an inferior good is not O'Reilly's
you know Black Angus burgers with steak
fries and if very good might be greasy
spoon diner any town USA on
one-two-three Main Street this is when
you know you gotta you gotta cut start
cutting costs and you know instead of
burgers you don't mind eating ramen
noodles and you are don't mind going to
the you know okay family we can't go to
that our normal place we're gonna go to
this place this discount greasy spoon
diner
so the demand actually increases for
this good when price
is or when your income Falls and another
example would be like a movie theater
people when they have a lot of money
they travel they go to Paris Montreal
when they don't they go to Disney they
go to you know we're in Florida people
ask me hey two people in Florida still
go to Disney you bet but when you can't
afford Disney you can grow up you can
blow a grand in Disney in a weekend then
you know you might go to the movies so
demand for and inferior good actually
increases if income Falls and conversely
its demand for an inferior good
decreases when income Rises because you
know I don't need to eat at the greasy
spoon diner a complimentary good is the
example of hamburgers and ketchup if the
price of hamburgers skyrocket then and
the price of ketchup stays the same then
you're gonna be experience a decrease in
the demand for ketchup
even though the price of ketchup is the
same ceteris paribus it's just that
these two go together they're
complements substitute good okay so
you've got a Riley's Irish pub steak or
Black Angus burger and steak fry
restaurant family restaurant down the
street right next to it is Duncan
MacLeod Highlander Black Angus mutton
stew and potato with carrots and ale
restaurant right next to it now to me as
an American consumer they look the same
you know you talked to an Irish person
and a Scottish they'll be looking at me
funny but to me it's basically the same
these are good substitutes so I can go
to either one so the price of a
substitute good it affects the demand
for the other if a Riley's just cranks
the price and doubles it maybe because
they feel they have superior burgers and
want to kind of show it show up for the
Scottish guys well you know me as a
consumer normal good I'm gonna start the
man they can go and take my family to
the Scottish restaurant you know Duncan
MacLeod Highlander restaurant instead
O'Reilly's pub down the street so that's
how the to interact now taste for goods
can shift if all of a sudden they
discover that you know in the Scottish
restaurant there's some magic herb or
herb that they use only grown in the
highlands that they import and this you
know increases growth of hair on the top
of your head you have more beautiful
hair like I do then I think the demand
for that restaurant will will start
going up people start going and
conversely if they discover that it
increases like facial growth hair in
both genders probably you're gonna see a
demand decrease so the tastes or
preferences can change you know
obviously you can use more realistic
scenarios where you know iPods everybody
wants an iPod everybody's using Google
search now used to be Alta Vista and or
Lycos or AOL even pou so you know
demands will shift based on taste
preferences fads trends I think you know
Hollister was really big everybody in
high school and then forever21 becomes
trendy and then it's the next wave
population population is a great shifter
I live in st. Augustine population is
increasing like you know just
skyrocketing so in some ways people say
it might be a bad thing or a good thing
but it doesn't matter every weekend the
restaurants are just jam-packed five
years ago that wasn't the case and it
wasn't just the cycle of the economies
that there's just more people more
people are going to restaurants and
O'Reilly pub will be filled to the max
every weekend just more people increases
demand and you can get into very
questionable discussions about
immigration about about world population
but it's an interesting note
expectations it's all about expectations
if I think that O'Reilly is going to
triple their price in a month I'm gonna
enjoy a Riley's as much as I can or
similarly if gas is going up maybe or
I'll tank my chaos you know next week
I'll tank it this week potatoes I know
are going up maybe I'll buy some
potatoes and throw it in the cellar
we don't have sellers and
but metaphorical root cellar somewhere
somewhere so this can increase the
demand so what are the five shifters you
know them income prices are related good
tastes population and demographics
expectations about the future Holle
gonna remember this for the exam you're
under pressure very easy way create a
mnemonic okay how you gonna remember
this you're gonna create a mnemonic
mnemonic is an ancient memory trick the
ancient Greeks they didn't have the
internet they didn't have all the stuff
we have today cell phones iPhones
whatever they had to use their brain
they created long sagas and stories that
remember them by heart and they use
these memory tricks because language and
memory is largely an activity of
association so in this one here's the
trick you this the only place you'll
find it on the web the five shifts is
the demand curve income population
related expectations in taste IP are et
in Paris rabbits eat Taurus I don't know
if that's true or not
I think Parisians eat rabbits actually
but that's another story the more crazy
funny a little bit speculative or risque
keep the risk any ones to yourself don't
broadcast them you'll remember it better
because the mind in Printz with emotion
and even with these slides I thought of
having just the slides but that's really
boring you see me animated you remember
a little bit better you're watching my
face you're watching me what's this guy
got to say what's he gonna do so make an
association when you're trying to
remember these five shifters of the
demand curve in mind in Paris rabbits
eat Taurus that's easy you can you can
shuffle and do it any way you want
guaranteed you'll remember it so you
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