Graphing Changes to Demand

So many different factors can affect the demand of a product over time. Sometimes this can occur simply due to a change in taste - we will not always continue to like the same products indefinitely. We try different brands or styles of a product and may switch to buying something different. For most normal products, income may play into the decision of what we purchase. Some brands are more expensive than others, so when we are making more money, we often will opt to buy the more expensive brand. If our income decreases, we switch to a brand that is less expensive to save money and buy those inferior products.

Prices can affect these decisions as well. As the price of a product rises, we may switch to a substitute product that is less expensive. Another determinant of demand is complementary products, which are products that are purchased because they complement another purchase. For example, when I purchased my iPad, I then bought the screen protector, the case, and some other accessories which complemented that first purchase. Our expectations of the future also plays a role at times. For example, if I hear that the price of fuel is expected to rise, I will gas up my car, even if I wasn't planning to or "needing" to for a few days more.

These demand changes can be illustrated on a graph. Please see the below example that I found on this website (2006).

Experimental Economics Centrer.  (2006). Using a Graph. Retreived July 18, 2012, from: http://www.econport.org/content/handbook/Demand/Graph.html