Movement Along and Shift in Demand Curve

Demand is a multi-variant function in the sense that it is influenced by so many factors such as the price of the commodity, the price of other related commodities, consumer incomes etc. The price of the commodity is the most important determinant of demand and its relationship with the quantity demanded give rise to a demand curve. Movement along demand curve is demonstrated by a change in the price of a good as shown in Figure 2.7 by movement from one point to another on the same demand curve.

Movement Along a Demand Curve

A change in price of a good from P1 to P2 causes a movement from point A to B along the demand curve. This movement along demand curve shows a change in quantity demanded which is an increase or a fall in the quantity demanded. A shift in the demand curve is caused as a result of a change in any factor affecting demand other than price such as changes in consumer income tastes and preferences.

For this reason all other factors affecting demand other than price ofthe product are also referred to as shifting factors as illustrated in Figure 2.8.

Shift in Demand Curve

Any change in the shifting factors will cause changes in demand (an increase or a fall in demand). A shift to the right (dd to d1d1) shows an increase in demand while a shift from (dd to d2d2) shows a decrease in demand. These shifts are caused by other factors of demand apart from own price. For instance, government policy like price caps can cause a shift in demand.

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