Lesson preview · Demand
Shifts in Demand
~8 min · Free to read
One distinction trips up more intro-micro students than any other. A change in the good’s own price causes a MOVEMENT ALONG the demand curve. Anything else causes a SHIFT OF the demand curve. Get this right and the rest of supply-and-demand falls into place.
Key Term
Movement Along the Curve
A change in quantity demanded caused by a change in the good’s own price. You slide from one point on the curve to another. The curve itself doesn’t move.
Key Term
Shift of the Curve
A change in demand caused by anything other than the good’s own price (income, tastes, prices of other goods, etc.). The entire curve moves left or right.
Tip
Mental test
Ask: ‘Did the good’s own price change?’ • YES → movement along. • NO (something else) → shift. This question solves 90% of the confusion.
Tip
Language matters
Economists are picky: ‘quantity demanded’ changed = movement along. ‘Demand’ changed = shift of the whole curve.
What causes shifts? Five categories, captured by the mnemonic TRIBE: Tastes, Related goods, Income, Buyers, Expectations.
Key Term
The 5 Demand Shifters (TRIBE)
• Tastes & preferences (trends, cultural shifts) • Related goods’ prices (substitutes and complements) • Income (real purchasing power changes) • Buyers (number of consumers in the market) • Expectations (about future prices or income)
Substitutes are goods that replace each other (Coke/Pepsi, Uber/Lyft). If the substitute’s price rises, demand for the good shifts right (buyers switch in). Complements are goods consumed together (hot dogs/buns, printers/ink). If the complement’s price falls, demand for the good shifts right (more of both consumed). Income shifts depend on whether the good is normal (demand rises with income — restaurants, vacations) or inferior (demand falls with income — instant noodles, used cars).
Direction is dead simple: right = more, left = less. A rightward shift means buyers want more at every price. A leftward shift means less at every price.
Trap · Common Misconception
'Up' and 'down' shifts aren't a thing
Demand curves shift LEFT or RIGHT — horizontally. ‘Up’ and ‘down’ describe movement along the curve (a higher or lower price). Don’t mix the two.
Check yourself · no marks
Apple announces that next year’s iPhone will have a groundbreaking new feature at the same price. What happens to demand for the CURRENT model?
Commit to one first. Guessing and being wrong beats reading the answer cold.
Worked Example
For each scenario, decide whether it’s a movement along or a shift of the demand curve for the affected good. If a shift, name the TRIBE shifter and the direction.
- Pizza prices rise from 12 dollars to 15 dollars per pie.
- A vegan documentary goes viral; many viewers swear off red meat. Effect on beef demand?
- Hot dog prices drop sharply. Effect on demand for hot dog buns (a complement)?
- A new university opens, bringing 5,000 students to town. Effect on demand for groceries?
- People expect gasoline prices to spike next week. Effect on gas demand TODAY?
That three-step sequence — draw the shift, find the new equilibrium, defend it in words — is exactly the shape of an exam free-response question. If you can do all three without prompting, you own this concept.
Practice · 1 / 5
Gas prices rise from 3 dollars to 4 dollars. People drive less. This is:
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