Change in demand and change in quatity demanded

Topics: Supply and demand, Consumer theory, Goods Pages: 1 (255 words) Published: February 25, 2014
Question 3
a) Explain and illustrate with diagrams the difference between “a change in demand” and a change in “quantity demanded”? i. A change in demand is a change in quantity demanded at each possible price and is cause by changes in factors other than the good’s or the products own price. That is if there is a shift in income, price of substitute or complementary goods, number of consumers, change in taste, or expectations in good. Increases and decreases in demand are shown by rightward or leftward shifts of the whole demand curve. Example for change in demand:

Consumers are willing to buy more luxury goods due to the increase in income. An increase in demand is illustrated in a graph by a rightward shift (from Q = 80 to Q = 100) in the demand curve.

ii. A change in quantity demanded occurs when the movements along the same demand curve caused solely by changes in the price of the product itself. If there is an increase in the price of a good, the quantity demanded will fall. But if the price of a good decrease, the quantity demanded will increase. Example for change in quantity demanded:

The price of Domino’s pizza increases from RM30 per pizza to RM35 per pizza. A quantity demanded change is illustrated in a graph by a movement along the demand curve. In the graph below we are moving along the demand curve from the first intersection point (Q = 100 and P = RM30) to the second intersection point (Q = 50 and P = RM35).
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