Change In Demand

AAA

DEFINITION of 'Change In Demand'

A term used in economics to describe that there has been a change, or shift in, a market's total demand. This is represented graphically in a price vs. quantity plane, and is a result of more/less entrants into the market, and the changing of consumer preferences. The shift can either be parallel or nonparallel.

A parallel shift in demand means that there is no change in the elasticity of demand for the given market, but a nonparallel shift means there has been a change in elasticity.

INVESTOPEDIA EXPLAINS 'Change In Demand'

For example, if there is a perceived increase in the price of gasoline, then there will be a decrease in the demand for SUVs, ceteris paribus. This shift is likely to be parallel, as those who are still in the market for SUVs are still as sensitive to price increases in the prices of SUVs as before the perceived increase in gasoline prices took place.

RELATED TERMS
  1. Demand Shock

    A sudden surprise event that temporarily increases or decreases ...
  2. Equilibrium

    The state in which market supply and demand balance each other ...
  3. Macroeconomics

    The field of economics that studies the behavior of the aggregate ...
  4. Microeconomics

    The branch of economics that analyzes the market behavior of ...
  5. Demand

    An economic principle that describes a consumer's desire and ...
  6. Price Elasticity Of Demand

    A measure of the relationship between a change in the quantity ...
Related Articles
  1. Economics Basics
    Economics

    Economics Basics

  2. How Influential Economists Changed Our ...
    Fundamental Analysis

    How Influential Economists Changed Our ...

  3. Cost-Push Inflation Versus Demand-Pull ...
    Entrepreneurship

    Cost-Push Inflation Versus Demand-Pull ...

  4. What causes a significant move in the ...
    Investing

    What causes a significant move in the ...

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center