March 06, 2019

Factors Causing Shift In Demand Curve

Increase or decrease in various factors such as income of people, price of substitutes, rise or fall in the number of buyers, marketing and promotional activities etc. increase or decrease the demand of products or services. Therefore, these factors cause shift in the demand curve (either shift to left or shift to the right). This post highlights the major factors that cause the change.

The major factors that causes shift in the demand curve can be highlighted as follows:

1. Consumer's Income

If the income of consumers increases the demand rises and demand curve shifts to the right. If income decreases then demand falls and demand curve shifts to the left.

2. Price Of Substitutes

Price of substitutes products also causes the shift in demand curve. It the price of substitutes increases, the demand for related products increases and demand curve shifts to the right and vice versa.

3. Number Of Consumers

Demand increases with the rise in the number of buyers and decreases with the fall in the number of buyers. This also causes shift in the demand curve.
factors causing shift in demand curve
4. Advertisement

Advertisement helps to attract more consumers which leads to rise in demand. Therefore, advertisement helps to shift demand curve to the right.

         
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5. Tastes And Preferences

Rise in tastes and preference leads to increase in demand of the product and it causes change in demand curve also.

6. Tax Policy

Tax policy is also the factor that influence the demand curve. If the tax rate is increased demand for the product will decrease and demand curve shifts to the left and vice versa.