Question

Explain the shift of the demand curve and compare it with the movement along the demand curve with the help of diagrams.

Answer 1

When the amount demanded of a commodity changes (rises or falls) as a result of a change in its own price, while other determinants of demand (like income, tastes and prices of related goods) remain constant, it is known as a change in the quantity demanded.

when the price is OP₁, the quantity demanded is OQ₁. Now, if the price of the commodity falls to OP₂, the quantity demanded rises to OQ₂. This movement from A₁ to A₂ in the downward direction (as indicated by an arrow) on the given demand curve DD is the expansion of demand. On the other hand, if the price of the commodity rises from OP₁ to OP₃, the quantity demanded of the good falls to OQ₃. This movement from A₁ to A₃ in the upward direction (as indicated by the arrow) on the given demand curve is the contraction of demand.