Graphing Changes to Demand

Looking at the graphs on pg 50 and 51 illustrated the changes in graphing of the demand production. The following factors determine if the demand will increase or decrease:

• A substitution effect - is when a consumer can purchase a similar product at a different price.
• Income effect - a consumer could have received a increase in their income would then have an increase in the quanity demanded for the product.

I go to the grocery store ever sunday and I am not very picky on the products I buy. I will usually buy yogurt and other products. I go to the area where the yogurt is and compare the quanity and prices of each similar items. I usually am not loyal to one brand of product. This is an example of a subsitution effect. I am purchasing similar products at a much lower price - which ever one is usually on sale that week.

This can be represented in the below graph.