Answer to Question #168640 in Microeconomics for SITI NUR HAZIQAH

Question

using an example of your own distinguish between shifts of demand and movement along a demand curve

Answer 1

The movement along a demand curve occurs when there is a change in price, but no change in any of the other variables that affect demand (for example, income or population). For example, if the price of Coca-Cola decreases from $7 to $5 per bottle, consumption increases from 10 million bottles to 25 million bottles per month. As a result, there is a movement along a demand curve.

The shift in demand occurs when there is a change in the quantity demanded at each possible price due to a change in any of the other variables that affect demand. For example, if the price of Pepsi (the substitute good) increases, the quantity of Coca-Cola demanded also increases at each price. As a result, the demand curve will shift to the right.