Question

What is the difference between ' change in demand' vs. 'change in quantity demanded'? What are the determinants of change in demand?

Answer 1

Change in quantity demand means the change in quantity purchased results in increase or decrease in the price of a product. Change in quantity demand is measured by the movement along the demand curve. Change in quantity demand means expansion or contraction of demand.

Change in demand means to increase or decrease in demand for a good due to various determinants of demand, keeping the price at constant. Change in demand is measured by shifts in the demand curve. Change in demand means to increase or decrease in demand.

determinants of change in demand

a) Income- If income increases, demand will be increased or vice-versa for a normal good.

b) The number of buyers- More buyers lead to increase in demand. Few number of buyers lead to decrease in demand.

c) Price of related good- Price of a substitute good and demand for other good are directly proportional. For an example, tea and coffee are the substitute for each other. If the price of coffee increases, demand for tea will be increased.

Price of complement good and demand for the others are inversely related. For example, tea and sugar are the complement to each other. if the price of sugar is increased, demand for tea will be increased.

d) The expectation of future- If the expected price in future is increased, consumer's current demand will be increased and vice-versa.