What are the factor causing shift in demand curve? |
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| Ans : The major reason for shift demand curve are explained below:
(i) Change in income of the consumer:- when income of the consumer increases the demand for normal goods increases and therefore demand curve shifts rightward of the original demand curve. Again when income of the consumer increases the demand for inferior goods decreases and demand curve shifts leftward of the original demand curve.
(ii) Change in price of related goods:- There are two types of related goods. They are substitute and complementary.
a) Substitute goods:- When there is increase in price of one commodity, the demand for it’s substitute goods increase. For example, when there is increase in price of coke, demand for Pepsi will increase and demand curve of Pepsi will shift rightward.
b) Complementary goods:- When the price of one commodity increase the demand for it’s complementary goods decreases. For example, Bike and petrol, when the price of petrol increases, the demand for Bike decreases and demand curve shift leftward of the original demand curve.
iii) Change in taste and preference of the consumer:- When there is change in taste and preference of the consumer, there is change in demand. When demand for a particular commodity increases, the demand for it will increase and demand curve shift rightward of the original demand curve.
iv) Advertisement:- When there is increase in advertisement for a particular commodity, the demand for it will increase and demand curve shift rightward of the original demand curve.
v) Expectation of consumer:- When a consumer expects that there will be fall in price in near future, the consumer will postpone their demand due to which demand will decreases and demand curve shift leftward of the original demand curve.
vi) Availability of credit:- When a consumer gets credit facilities from sellers, bank, friends and relatives etc. the demand for commodity increases and demand curve shifts rightward of the original demand curve.
vii) Size and composition of population:- When there is increase in size of population, the demand for commodity will increase and demand curve shifts rightward of the original demand curve.If population mostly consists of aged people above 60 years, there will be more demand for medicines and health services. In that case the demand curve shifts rightward of the original demand curve.
viii) Distribution of income:- If the income is equally distributed among the people, the demand for goods will be increases, and the demand curve shifts rightward of the original demand curve.
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