Shifts in demand

The position of the demand curve will shift to the left or rightfollowing a change in an underlying determinant of demand.

Increases in demand are shown by a shift to the right in the demand curve. This could be caused by a number of factors, including a rise in income, a rise in the price of a substitute or a fall in the price of a complement.

Demand schedule

A shift in demand to the right means an increase in the quantity demanded at every price. For example, if drinking cola becomes more fashionable demand will increase at every price.

PRICE (£) ORIGINAL Qd NEW Qd 1.10 0 100 1.00 100 200 90 200 300 80 300 400 70 400 500 60 500 600 50 600 700 40 700 800 30 800 900

Increases in demand

An increase in demand can be illustrated by a shift in the demand curve to the right.

Decreases in demand

Conversely, demand can decrease and cause a shift to the left of the demand curve for a number of reasons, including a fall in income, assuming a good is a normal good, a fall in the price of a substitute and a rise in the price of a complement.

Demand schedule

For example, if the price of a substitute, such as fizzy orange, falls, then less cola is demanded at each price, as consumers switch to the substitute.

PRICE (£) ORIGINAL Qd NEW Qd 1.10 0   1.00 100   90 200 100 80 300 200 70 400 300 60 500 400 50 600 500 40 700 600 30 800 700

Decreases in demand are shown by a shift of the demand curve to the left.