Question

Explain the difference between change in quantity demanded and a shift in demand. What causes changes in quantity demanded? What causes a shift in demand?

Please do not copy and paste,

Answer 1

Change in quantity demanded is represented by a movement along the demand curve. Demand curve represents the inverse relationship between price and quantity demanded, other things remaining constant. When price increases, quantity demanded decreases and when price decreases, quantity demanded increases. Change in quantity demanded captures this inverse relationship. Change in quantity demanded is caused by change in price. When price increases, we see an upward movement along the demand curve indicating fall in quantity demanded and when price fall we see a downward movement along the demand curve indicating increase in quantity demanded.Thus it is changes in price that causes changes in quantity demanded.

Demand curve represents the inverse relationship between price and quantity demanded, when other things remaining constant. Change in demand occurs due to changes in the 'other things' that were held constant. Demand is a function of both price and non-price factors. When the non-price factors change demand changes and it leads to shifts in the demand curve. With price remaining the same, changes in non-price factors such as income, taste, preferences, price of related commodities etc leads to increase or decrease in demand and this is represented by the shift of the demand curve and is referred to as change in demand. Shift in demand curve is caused by non-price factors such as income, taste, preferences, expectations etc.