Business Economics · Ch 2 — Demand Analysis
Movement Along vs Shift of the Demand Curve
Movement Along vs Shift of the Demand Curve
A common and important confusion in demand analysis is between a movement along a demand curve and a shift of the whole demand curve. The distinction turns on which determinant has changed.
Movement along the demand curve (change in quantity demanded). When the price of the good itself changes and all other determinants stay constant, the consumer moves from one point to another on the same curve. A fall in own price causes a downward-rightward movement called an extension of demand; a rise in own price causes an upward-leftward movement called a contraction of demand. This is called a change in quantity demanded.
Shift of the demand curve (change in demand). When a determinant other than own price changes — income, prices of related goods, tastes, expectations, number of buyers — the entire curve moves to a new position, because now a different quantity is demanded at every price. A movement of the curve to the right (outward) means more is demanded at each price and is called an increase in demand; a movement to the left (inward) means less is demanded at each price and is called a decrease in demand. This is called a change in demand.
The contrast can be tabulated:
| Basis | Movement along the curve | Shift of the curve |
|---|---|---|
| Cause | Change in own price | Change in a non-price determinant |
| Curve | Same curve; move between two points | Whole curve moves to a new position |
| Name | Change in quantity demanded | Change in demand |
A movement along the same demand curve caused by a change in the good's own price — an extension (price fall) or cont …
A shift of the whole demand curve caused by a change in a non-price determinant — an increase (rightward shift) or decr …