Introducing Supply and Demand

1. Demand - The Law of Demand

Shift in the Demand Curve

The demand curve will shift, move either inward or outward as a result of non-price factors. A shift in demand can be related to the following factors (non-exhaustive list):

  • Consumer preferences
  • Consumer income
  • Change in the price of related goods (i.e. compliments)
  • Change in the number of buyers
  • Consumer expectations

law of demand

Law of Demand: A demand curve, shown in red and shifting to the right, demonstrating the inverse relationship between price and quantity demanded (the curve slopes downwards from left to right; higher prices reduce the quantity demanded).

Though in general terms and specific to normal goods, demand will exhibit a downward slope, there are exceptions: Giffen goods and Veblen goods