What is a Shift in Demand?

A shift in demand is the quantity of a product consumers are willing to buy at

various prices due to factors other than the price. An increase in demand can be
shown by a rightward shift in the demand curve and a decrease in demand can be
shown by a leftward shift.

Factors That Can Shift the Demand Curve

 Income: An increase in a consumers income means that they will have more
disposable income which means that their demand for goods will also
increase. However, if a consumers income reduces their demand will also
reduce.
 Trends: Personal tastes and cultural trends heavily influence the demand of
products from certain industries such as the clothing industry where trends
change very often.
 Advertising: Advertising and marketing can significantly influence consumer
perceptions of a certain product; therefore, good advertising can certainly
increase the demand of a certain product.
 Price of Substitutes: An increase in the price of a substitute good will
normally lead to an increase in demand for the cheapest substitute.
 Price of Complements: An increase in the price of a complementary good
may reduce the demand for another product. For example, if the price of
cereal increases, the demand for milk may reduce.
 Seasonal Changes: Some products, such as ice cream or swimsuits, may see
shifts in demand due to the seasonal/weather conditions. For example,
more people would want ice cream during summer rather than winter,
therefore the demand for ice cream increases during summer.
What is a Shift in Supply?

A shift in supply refers to changes in the quantity of a product that producers are
willing to provide at various prices. Like demand, an increase in supply can be
shown by a rightward shift in the supply curve and a decrease in supply can be
indicated by a leftward shift in the supply curve.

Factors that may Shift the Supply Curve

 Costs of Production: An increase in production costs such as higher labour

or raw material costs can decrease the supply of a product and a decrease
in production costs can increase the supply of a product.
 New technologies: New technologies are more efficient and reduce the
costs of production; therefore, they can cause an increase in supply.
 Taxes: Taxes can be set by the government to reduce the supply of certain
products that they deem harmful or bad for the public, such as cigarettes.
 Subsidies: Unlike taxes, subsidies can be provided to certain suppliers to
encourage them to supply certain goods for the country such as rice.