demand-curves-real-world-analysis

Real-World Example One: A Decrease in Demand

• During the COVID-19 pandemic, the demand for restaurant dining fell sharply due to changes in various conditions of demand 

  • Reduced disposable income as unemployment increased 

  • Changing preferences for safer dining options

  • Government restrictions on indoor dining

Diagram: Decrease in Demand for Restaurant Dining

Diagram analysis

• During to the pandemic, there was a downturn in the economy, causing unemployment levels to rise

  • As a result, there was a reduction in the real income of consumers

• Restaurant dining is considered a normal good, demand falls when consumer incomes fall 

• The demand curve shifts to left from D → D₁ as fewer consumers opt to eat out

• The price level remains the same (P₁), demand falls from Q₁ → Q₂

Real-World Example Two: An Increase in Demand

• In 2023, global demand for Taylor Swift concerts surged as a result of her music becoming more popular

  • This is considered to be a change in tastes and preferences

Diagram: Increase in Demand for Concert Tickets 

Diagram analysis

• Positive reviews of Swift’s concert and the popularity of her songs, along with changes in consumer tastes and preferences, have caused an increase in demand for concert tickets at each price level 

• The demand curve shifts right D → D₁ as more consumers buy concert tickets and the quantity demanded rises Q₁ → Q₂