Demand and Supply Analogies

Factors that Increase Demand, Shifting Curve to the Right:

• Increased income
• Increase in price of substitution goods
• Decrease in price of complementary goods
• Changing consumer tastes

Factors that Decrease Demand, Shifting Curve to the Left:

• Decreased income
• Decrease in price of substitution goods
• Increase in price of complementary goods
• Changing consumer tastes

Why It Matters Today
Remember our delicious and entertaining complementary goods, baseball tickets and hot dogs?
Turns out that sales in baseball tickets and Dodger Dogs don't track each other perfectly.  Since the economy went into decline a couple years back, prices for baseball tickets have held steady or even increased.  But attendances haven't fallen too dramatically.  Ballpark hot dog sales, though, have fallen off sharply.
What does that mean? It means that hot dogs have greater price elasticity than baseball tickets.  People still want to go to the ballgame, even if tickets become more expensive relative to incomes.  But they're willing to forego the extra five or ten bucks they might have spent on an overpriced hot dog once they're inside.
Ballpark concession owners from coast to coast must be crying into their $12 "souvenir cup" beers.

substitutes

complements

Complementary goods also impact demand. Complementary goods are goods that go together or are related: beer and pretzels, cameras and film, polyester bell bottoms and platform shoes, Rogaine and hair gel.
When the price of one good changes, its complementary good is affected. If film prices increase, people will buy fewer cameras. If polyester bells drop in price, demand for the four-inch platforms that best highlight the timeless lines of the disco-era bad-boys will rise.  And so on.
The demand curve for a good will shift to the left if the price of its complementary good increases. And vice versa.