Draw a dotted horizontal line from the chosen price, through the original quantity demanded, to the new point with the new Q.

Shift in Demand

A shift in demand means that at any price (and at every price), the quantity demanded will be different than it was before. Following is an example of a shift in demand due to an income increase.

Step 1. Draw the graph of a demand curve for a normal good like pizza. Pick a price (like P0). Identify the corresponding Qo. See an example in Figure 3.6.

Quantity Demanded

Figure 3.6 Demand Curve We can use the demand curve to identify how much consumers would buy at any given price.

Step 2. Suppose income increases. As a result of the change, are consumers going to buy more or less pizza? The answer is more.

Draw a dotted horizontal line from the chosen price, through the original quantity demanded, to the new point with the new Q.

Draw a dotted vertical line down to the horizontal axis and label the new Qi. Figure 3.7 provides an example.