Question

Explain Demand and Supply shifts. Analyze the change in Demand & change in supply. What is the difference between a change in quantity demand and a change in quantity supply?

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. A numerical tabulation of this relationship is known as the demand schedule. The demand curve is the graphical representation of the law of demand. The demand curve is negatively sloped. 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 change in the demand, there will be a shift of the demand curve.

Hence it can be said that a change in demand means a shift in the demand curve while a change in the quantity demanded means a movement along the demand curve are correct.

Since the law of supply states that there is a direct relationship between price and quantity supplied and other factors that affect the supply remains the same. A numerical tabulation of this relationship is known as the supply schedule. The supply curve is the graphical representation of the law of supply. The supply curve is positively sloped.

The supply curve shows the direct relationship between price and quantity supplied. The determinants are; Technology, costs of inputs, and a number of potential suppliers.

When there is a change in its own price, then there will be movement along the supply curve, it is called a change in the quantity supplied while when there is a change in the factors other than price, there will be shifts in the supply curve. It is called a change in the supply.