ECON101 - Principles of

Economics

Dr. Mousami Prasad

Visiting Faculty, FLAME University, India

Research Fellow/ Lecturer, Australian National University,Australia

Jan-Feb 2021
 Recap

• Basic Calculations
• Circular Flow Diagram
• Theories of Demand
Microeconomics vs. Macroeconomics
• https://economictimes.indiatimes.com/

• https://www.fxstreet.com/economic-calendar

• https://pib.gov.in/AllRelease.aspx?MenuId=3

• https://www.bseindia.com/

• https://www.nseindia.com/
 Session V
• Theories of Demand – Movement along the demand curve and the
shift of the demand curve

• Theories of Supply and Market

Shifts in Demand Curve and Movements along the demand curve

Shifts in Demand Curve - ?????

Movement along the Demand Curve - ????

Shifts in Demand Curve and Movements along the demand curve
• Shifts in Demand Curve - Any change that increases the quantity demanded at every price
like technological development shifts the demand curve to the right and is called an
increase in demand.

• Any change that reduces the quantity demanded at every price shifts the demand curve to
the left and is called a decrease in demand.
 Exercise -- Shifts in Demand Curve
• Examples of Shifts in Demand Curve
Shifts in Demand Curve and Movements along the demand curve
• There are many variables that can shift the demand curve.

Variable
Income
Prices of related goods

Tastes
Expectation
Number of buyers
Shifts in Demand Curve and Movements along the demand curve
Shift in Demand Curve
160

140

120

100
Price

80

60

40

20

Qty Demanded Qty Demanded 1 Qty Demanded 2

 Factors responsible for shift in Demand Curve
Income -
• If the demand for a good falls when income falls, the good is called a normal good e.g
luxury travel
• If the demand for a good rises when income falls, the good is called an inferior good e.g.
bus rides

Prices of Related Goods -

• When a fall in the price of one good reduces the demand for another good, the two goods
are called substitutes e.g petrol car and diesel car
• When a fall in the price of one good raises the demand for another good, the two goods
are called complements e.g. tea and sugar; bat and ball
 Movements along the demand curve
• There are many variables that can cause movement along the demand curve?
 Movements along the demand curve
• There are many variables that can cause movement along the demand curve?

NO
Change in the Price of the good itself represents the movement along the demand curve.
Shifts in demand curve and movement along the demand curve
• Example -
https://www.indiatvnews.com/business/news-itc-cigarette-prices-hike-by-10-20-per-cent-n
irmala-sitharaman-budget-excise-duty-tobacco-cigarettes-588514
 Thank You

For any query, suggestion, feedback please

email at mousamiprasad@gmail.com and in the
subject line mention the word ECON101