Shifts in Demand:
A shift in Demand is caused when the price of a goods in Joint demand or competing demand rise or fall, or simply caused by a change in people's current interests.
If the Demand curve was to shift to the right, then this would indicate that the Quantity demanded for a product would increase as price stays the same. Similarly, if the Demand curve shifts to the left, the opposite has happened-Quantity demanded for the good decreases as price stays the same. The graph below shows just that:
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| Shifts in demand |
-A rightward shift causes the Demand curve shift to shift to the right. This is represented by the Demand curve D2. This could be caused by an increase in population.
-A leftward shift in Demand causes the Demand curve to shift to the left. This is represented by the Demand curve D3. This could be caused by a decrease in the price of a good in Joint Demand (goods that go together, like CDs and CD players).
Shifts in supply:
A shift in supply is caused when the firm changes the price at which they will sell a certain quantity of the good at a different price, when the firm has had a tax imposed on them or when the firm has been granted a subsidy by the government. If the supply shifts to the left, then the firm may have had a tax imposed on them. Similarly, if the supply curve shifts to the right, then they may have had a subsidy granted to them. The graph below shows this:
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| Shifts in Supply |
-The Supply curve S1 represents the original supply curve.
-A rightward shift in Supply causes the supply curve to shift to the left. This is represented by the supply curve S2. This could be caused by a subsidy granted to them.
-A leftward shift in supply causes the Supply curve to shift to the left. This is represented by the Supply curve S3. This could be caused by a tax being imposed on the firm.
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