Introduction

What do you think will happen to the market demand curve for fried chicken pieces if the preference for it by households decreases?






Let’s see what happens to the demand curve.

From the previous information, we know that at each price, a lower quantity of fried chicken pieces will be demanded. There is thus a new demand curve for fried chicken pieces. This new demand curve is positioned to the left of the previous demand curve, and a leftward shift has therefore occurred in the demand curve for fried chicken pieces.

Study the new demand curve (D1) in the following figure:

Can you see the following?

  • At R7 per piece, the quantity of fried chicken pieces demanded is 6.
  • At R6 per piece, the quantity of fried chicken pieces demanded is 12.
  • At R5 per piece, the quantity of fried chicken pieces demanded is 18.
  • At R5 per piece, the quantity of fried chicken pieces demanded is 18.
  • At R4 per piece, the quantity of fried chicken pieces demanded is 24.
  • At R3 per piece, the quantity of fried chicken pieces demanded is 30.
  • At R2 per piece, the quantity of fried chicken pieces demanded is 36.
  • At R1 per piece, the quantity of fried chicken pieces demanded is 42.

As a general rule, we can now state the following:

A shift of the demand curve occurs when the demand increases or decreases, indicating that at every price, the quantity demanded is different from before the change in demand.

An increase in income causes a rightward shift of the demand curve, indicating that at every price, the quantity demanded is higher.

A decrease in tastes and preferences causes a leftward shift of the demand curve, indicating that at each price, the quantity demanded is lower.

In the above examples, we observed a change in the position of the demand curve – a rightward shift and a leftward shift.

Before we continue with the impact of non-price factors of demand, we have to distinguish between a change in demand (a shift of the demand curve) and a change in quantity demanded (a movement along the demand curve).

Activity

Do the following activity about a shift of the demand curve:

Businesses spend billions of rand on advertising to influence the tastes and preferences of consumers to ensure that there is a high demand for their products.

What would happen if, as a result of a major advertising campaign, the demand for chocolate bars were to increase?





Correct.

Through the advertising campaign, tastes and preferences would change, and the demand for chocolate bars would increase and the demand curve for chocolate bars would thus shift to the right.

Think again.

It increases the demand.

Think again.

An upward movement occurs if the price increases.

Think again.

A downward movement occur if the price decreases.

Activity