With the aid of diagrams, explain what is meant by a change in: (a) the quantity demanded; (b) demand.

Answer Details

The key is to distinguish a movement along a demand curve from a shift of the whole curve. Draw both on axes with price on the vertical axis and quantity demanded on the horizontal axis.

(a) Change in quantity demanded. This is a change in the amount buyers wish to buy caused only by a change in the price of the good itself, all other factors remaining constant. It is shown as a movement along the same demand curve \( DD \): a fall in price causes a downward movement to a larger quantity (an extension of demand), while a rise in price causes an upward movement to a smaller quantity (a contraction of demand). The curve does not move.

(b) Change in demand. This is a change in the amount demanded at every price, caused by a change in a factor other than the good's own price, for example income, tastes, the price of related goods, population or expectations. It is shown as a shift of the entire demand curve: an increase in demand shifts the curve rightward from \( DD \) to \( D_1D_1 \) (more bought at each price), while a decrease shifts it leftward to \( D_2D_2 \) (less bought at each price).

Examination reminder: if the good's own price changes, it is a change in quantity demanded (movement along); if any other factor changes, it is a change in demand (shift of the curve). Confusing the two is the commonest error on this topic.