Question

In: Economics

Explain briefly but clearly the times when a demand curve moves. When is there movement along...

Explain briefly but clearly the times when a demand curve moves. When is there movement along the demand curve? Provide examples from your personal or professional life where you believe a demand curve shifted. Provide an example of when there was a movement along the curve.

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Expert Solution

The law of demand states that other things remaining constant as price of a commodity increases its quantity demanded decreases and vice versa. This change in price and quantity demanded is associated with a move along the demand curve.

On the other hand, when the quantity demanded increases or decreases due to other factors but price remaining constant, there occurs a shift of the demand curve. The other factors may include taste and preferance of the consumer, money income of the consumer, expectattions of the consumer, price of related goods (complement or substitute).

For eg, when the price of egg is 2$, my quantity demanded is 10 eggs. But when the price of egg becomes $4, my quantity demanded decreases to 5. This is an example of movement along a demand curve.

On the other hand, When the price of egg is $2, my quantity demanded is 10 eggs and my money money income is $100. Now, my monwy income increases to $200. Price of egg remaining constant at $2, my quantity demanded increases to 20 eggs. This is an example of shift of the demand curve.


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