we now know the things that shift the demand curve when consumers have higher incomes the demand for normal Goods increases when they have lower incomes the demand for inferior Goods increases demand will increase if the price of a substitute increases or if the price of a complement decreases we can also increase Demand by shifting consumer preferences in favor of it giving consumers positive expectations about purchasing the product now or reducing uncertainty about the purchase and of course demand increases when we add more consumers to the market reverse any of those scenarios and demand will decrease instead shifting to the left but now the question is what doesn't shift demand consider this scenario the price of cars increases what happens to the demand for cars we know the law of demand when the price increases the quantity demanded decreases and in that sentence there's a critical word it is the quantity demanded that changes not demand but the quantity demanded what's the difference a change in demand would be represented by a shift in the demand curve to the left or right as we've seen all throughout the chapter but a change in the quantity demanded would look like this it is movement along the demand curve we change the point we are at as if we're in a car driving on a road to our new coordinates for price and quantity look if we were just talking at a party about demand as I'm sure you will someday I wouldn't fault you for saying something like when the price increases demand Falls but that isn't exactly right because it isn't demand meaning the whole demand curve which Falls it's the quantity demanded or the horizontal position on the demand curve which is Fallen the takeaway here is that is that if the price of X changes that doesn't shift the demand curve for x all right this one is trickier the price of electronic components needed to produce cars increases now what happens to the demand for cars most of us spend most of our economic life in the mindset of a consumer and so we want to chalk up all Market changes to changes in consumer Behavior but remember demand represents consumers willingness to pay does anything that affects the cost of producing a vehicle impact your willingness to pay for it if it did then car companies would have a big incentive to just waste money on components so they could tell you how it costs lots of money to make the car and get you willing to pay more for it no what I'm willing to pay for something is not related to how much it costs to produce something and so demand doesn't shift here that would Shift Supply but we'll leave that to a later chapter okay what if the government imposes a tariff which is a tax on cars imported from other countries with that effect the demand for cars oh what what was that I'm sure I just heard one of you say well it would affect the demand for the cars imported from other countries was that you well a bad news it would not again this is about the cost of producing vehicles part of that cost is delivering them to where they are purchased and it's of no concern to the consumer if a foreign automaker had to pay an extra tax or not this is something that would affect Supply not demand a lot of the trickiness when thinking about demand is that we're all trained by a market experience to have a sense of what the final outcome is going to be I know a tariff is going to affect the price of cars and so I want to try to explain that outcome with the tools before me but alas it is not through a change in demand that the price of cars will be impacted and so we return again to this demand represents how much consumers are willing to pay for something and that willingness to pay depends on their preferences and the constraints they face