Class 11 Micro Economics Notes · CBSE

Change in Demand

Change in Demand — understanding how increases and decreases in demand shift the demand curve and change equilibrium price and quantity. CBSE Class 11 Microeconomics notes with graphs.

Last updated: 16 Sep 2026

Notes

What Shifts the Demand Curve

Change in Demand (Shift in the Demand Curve)

Change in demand or shift in the demand curve occurs due to change in any of the factors that were assumed constant under the law of demand. The change may be either an ‘Increase in Demand’ or ‘Decrease in Demand’.

Change in the price of complementary goods

Change in the price of substitute goods

Change in income (normal and inferior goods)

Change in tastes and preferences

Expectation of change in the price in future

Change in population

Direction rule (from Chapter 3 — Demand): increase in demand shifts the demand curve rightward; decrease in demand shifts it leftward. Rightward shift causes: rise in the price of substitutes, fall in the price of complements, rise in income for normal goods, favourable change in tastes, and expectation of a future price rise — the opposites cause a leftward shift.

Increase in Demand

An increase in demand (assuming no change in supply) leads to a rightward shift in the demand curve from DD to D₁D₁.

Original market equilibrium is determined at point E, when the original demand curve DD and supply curve SS intersect each other. OQ is the equilibrium quantity and OP is the equilibrium price.

Increase in Demand

When demand increases to D₁D₁, it creates an excess demand at the old equilibrium price of OP.

This leads to competition among buyers, which raises the price.

Increase in price leads to a rise in supply and a fall in demand.

These changes continue till the new equilibrium is established at point E₁.

As there is an increase in demand only, equilibrium price rises from OP to OP₁ and equilibrium quantity rises from OQ to OQ₁.

Decrease in Demand

In case of decrease in demand (supply remaining unchanged), the demand curve shifts to the left from DD to D₂D₂.

Decrease in Demand

When demand decreases to D₂D₂, it creates an excess supply at the old equilibrium price of OP.

This leads to competition among sellers, which reduces the price.

Decrease in price leads to a rise in demand and a fall in supply.

These changes continue till the new equilibrium is established at point E₂.

Equilibrium price falls from OP to OP₂ and equilibrium quantity falls from OQ to OQ₂.

For ‘Effect on equilibrium price and quantity due to increase in income and increase in price of complementary goods’, refer to HOTS.

Key Takeaways

A change in demand is a shift of the whole demand curve, caused by any factor assumed constant under the law of demand — not by the price of the commodity itself. ⭐
The six shifters: prices of complements, prices of substitutes, income, tastes and preferences, future price expectations, and population. ⭐
Increase in demand (rightward shift, supply unchanged): equilibrium price rises and equilibrium quantity rises. ⭐
Decrease in demand (leftward shift, supply unchanged): equilibrium price falls and equilibrium quantity falls. ⭐
The adjustment runs through the old price: a rightward shift creates excess demand at OP, buyers compete, price rises until the new equilibrium E₁ is reached; a leftward shift creates excess supply, sellers compete, price falls until E₂. ⭐