Demand (continued)
Overview
A demand curve can change in two completely different ways, and examiners love to see whether you can tell them apart. Sometimes you slide along the same curve; other times the whole curve jumps to a new position. Mixing these up is one of the most common and costly mistakes in the subject.
In this lesson you will learn the precise difference between a movement along a demand curve and a shift of the curve, what causes each, and how to draw both. Master this and you can explain why prices and quantities change in any market, from coffee to smartphones.
Objectives
- causes of extensions and contractions in demand
- diagrams that illustrate movements along a demand curve
- causes of decreases and increases in demand
- diagrams that illustrate shifts of a demand curve
Audio Lesson
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Mind map
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Flashcards
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Demand (continued). Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- A fall in the price of a good itself causes: A. a leftward shift of the demand curve B. an extension of demand (movement down the curve) C. a decrease in demand D. a rightward shift of the demand curve Answer: B
- Which of the following shifts the demand curve for a good to the right? A. a rise in the good's own price B. a rise in income, for a normal good C. a fall in the good's own price D. a fall in the population Answer: B
- A rise in the price of a substitute will: A. decrease demand for the good B. cause a contraction of demand C. increase demand for the good (shift right) D. have no effect Answer: C
- A movement up a demand curve to a smaller quantity is called: A. an increase in demand B. a contraction of demand C. a decrease in demand D. a shift of the curve Answer: B
- A rise in the price of petrol reduces demand for large petrol cars because they are: A. substitutes B. inferior goods C. complements D. free goods Answer: C
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