Answer to Question #139741 in Microeconomics for megan

Question

In a market for apples, a consumer purchases 30 pounds when the price of apples is $1 per pound and the consumer's income is $5,000 per month. When the price of apples increases to $2 per pound, without any change in the consumer's income, she decides to purchase only 15 pounds of apples. Suppose, after a given period of time, the consumer's income falls to $3,000 per month. Her consumption of apples also decreases to 10 pounds. 

1.     Using the information above, illustrate the difference between a change in quantity demanded and a change in the demand for apples. Make sure to clearly indicate the various points.

Answer 1

A change in one or more determinants of demand causes a change in demand, thus the shift of the demand curve. On the contrary, while other factors affecting demand are constant and price is changes, there is a change in quantity demanded hence movement along the same demand curve.

In the above case, change in demand for apples is illustrated by the shift of demand curves from demand curve 1, D1 to demand curve 2, D2, thus a decrease in demand. The shift of demand curve is as a result of change in price level from $1 per pound to $2 per pound. On the other hand, changes in quantity demanded is depicted by the movement along demand curve 2 from point b to point a. This movement along demand curve 2 illustrates a decrease in quantity demanded.