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
Changes in these conditions of demand all shifted the entire demand curve left
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Diagram analysis
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During to the pandemic, there was a downturn in the economy, causing unemployment levels to rise
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As a result, there was a reduction in the real income of consumers
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Restaurant dining is considered a normal good, demand falls when consumer incomes fall
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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