Question

1. Explain fully the difference between an increase in demand and an increase in quantity demanded. Be sure to explain increase, not change or decrease. Provide at least four reasons for an increase in demand. Use appropriate graphs to illustrate your answer.

Answer 1

Since the law of demand states that there is an opposite relationship between price and quantity demanded and other factors that affect the demand remains the same. The demand curve shows an inverse relationship between price and quantity demand.

The demand determinant are; its own price, price of substitute goods, price of complementary goods, the income of the consumer, and taste and preferences of the consumers.

In case of a change in the quantity demand, there will be movement along the demand curve and in case of a change in the demand, there will be a shift of the demand curve.

The four reasons of an increase in the demand;

1.

Change in the taste and preferences of consumers towards any particular products.

2.

An increase in the income of the consumer will lead to an increase in the demand for goods.

3.

When the price of the substitute goods increases, then demand of its substitute goods increases because it is relatively cheaper. So the demand increases.

4.

An increase in the number of consumers for a particular product. Hence so more people demand for the product.