B. Movements along the demand curve are caused by changes in the price of a product.
The change in price of a good leads to a movement along its demand curve.
The correct answer is C. A change in the price of a good does not shift the demand curve. Instead, it causes a movement along the demand curve.
Factors that can shift the demand curve for goods and services, causing a different quantity to be demanded at any given price, include changes in tastes, population, income, prices of substitute or complement goods, and expectations about future conditions and prices.
A change in any one of the underlying factors that determine what quantity people are willing to buy at a given price will cause a shift in demand. Graphically, the new demand curve lies either to the right (an increase) or to the left (a decrease) of the original demand curve.
Only one i.e., price changes. All others like price of related goods, income, taste and preference remain constant, while drawing an individual's Demand curve for a commodity. Was this answer helpful?
The demand for a good increases if the price of one of its complements falls. The demand for a good decreases if the price of one of its complements rises. A rise in the expected future price of a good increases the current demand for that good.
A movement along the demand curve is caused by a change in PRICE of the good or service. A shift in the demand curve is caused by a change in any non-price determinant of demand.
The demand for a normal good increases if income increases. The demand for an inferior good decreases if income increases. Expected future income and expected future prices influence demand today. For example, if the price of a computer is expected to fall next month, the demand for computers today decreases.
The factors affecting demand are assumed to be held constant. A change in price leads to a movement along the demand curve and it referred to as a change in quantity demanded. Hence option A is the correct answer.
The diagram above shows two demand curves for video games identified as D1 and D2.
A) The existing surplus in the market will cause upward pressure on prices until equilibrium is reached at 75 units.
Movement along a demand curve can also be understood as the variation in quantity demanded of the commodity with the change in its price, ceteris paribus.
The graphical representation of the relationship between the demand of the commodity and price of the commodity, at any given time, is known as the demand curve.
The amount of quantity demanded by the consumer changes with the rise and fall in the price of the commodity if other determinants of demand remain constant. This alternation in demand, when shown in the graph, is known as movement along a demand curve.
In a graph, the price of the commodity is represented in the vertical axis (Y-axis) and the quantity demanded is represented on the horizontal axis (X-axis). A commodity’s price and its demand share inverse relationship. This means, higher the price of the commodity, lesser will be its demand and lower the price, higher will be the demand. Therefore, in a graph, demand curve makes a downward slope.
Extension in a demand curve is caused when the demand for a commodity rises due to fall in price. And, contraction in demand curve is caused when the demand for a commodity falls due to rise in price.
The shift in demand curve is also of two types – rightward shift and leftward shift.
When the demand for a commodity increases at the same price due to favorable changes in non-price factors, the initial demand curve shifts towards the right, and there is a rightward shift in the demand curve. Similarly, when the demand for a commodity fails at same price due to unfavorable changes in non-price factors, the initial demand curve shifts towards left, and there is a leftward shift in the demand curve.