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: 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