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Main content
Current time:0:00Total duration:3:33

Changes in income, population, or preferences

MKT‑2 (EU)
MKT‑2.B (LO)
MKT‑2.B.1 (EK)
MKT‑3 (EU)
MKT‑3.B (LO)
MKT‑3.B.1 (EK)

Video transcript

so we've been going through all of the other things that we were assuming or held constant in order to be moving along one demand curve and now let's list a few other and before I do any more of them let's talk about the ones we already talked about so one we said that one of the things we held constant let me write this down so held constant held constant one of the things that we held constant on though to move along one demand curve for the demand itself to not shift for the curve to not shift is price of related goods price of related goods the other thing we assumed that's being held constant is price expectations for our good price expectations and now we'll list a couple of them that are fairly intuitive but you'll see in the next few videos that they're often special cases even to this so the other thing that we we've been holding constant to stay on one demand curve is income is income and this one is fairly intuitive if what happens if everyone's income were to increase and it's in real terms it were to actually increase well then all of a sudden they have more disposable income maybe to spend on something like ebooks and so for any given price point the demand would increase and so it would increase the demand and once again when we talk about increasing demand we're talking about shifting the entire curve we're not talking about a particular quantity of demand so income goes up then it increases demand demand demand goes up and remember when we're talking about in cut when demand goes up what about the whole curve shifting to the right at any given price point we are probably we're going to have a larger quantity demanded so the whole curve this whole demand schedule would change and likewise if income went down demand would go down and we're going to see in the future video it's actually quite interesting that's not always not the case this is only true for normal Goods this is only true for normal Goods normal Goods and in a future video we'll see Goods called in fear Goods word this is not necessarily the case or by definition for an inferior good it would not be the case now the other ones that are somewhat intuitive our population population once again if population goes up obviously for any at any given price point more people will want it so it would shift the demand curve to the right or it would increase demand if population were to go down it would decrease demand which means shifting the whole curve to the left and then the last one we'll talk about and remember we're holding all of these things constant in order for demand not to change the last thing is just is just preferences we're assuming that people's tastes and preferences don't change while we move along a specific demand curve if preferences actually change then it will change the curve so for example if all of a sudden I'm I'm you know the author of the book is on some very popular show talk show that tells everyone that this is the best book that would ever written then preferences would go up and that would increase the total demand at any given price point more people would be willing to buy the book if on the other hand on that same talk show it turns out that they do an expose on the author having this you know sorted past and the author plagiarized the whole book then the demand will go down the entire curve regardless of the price point at any given price point the quantity demanded will actually will actually go down
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