Q3. Distinguish between change in quantity demanded and change in demand.
Differentiate between movement along a demand curve and shift in a demand curve.
Ans. Change in quantity demanded means change in demand that takes place due to a change in price. Movement along a demand curve refers to a change in quantity demanded due to a change in price in the same demand schedule. When price falls, the quantity demanded increases causing downward movement along the demand curve. Movement from point A to B on demand curve d1 when the price falls from P to P1 causing quantity to increase from Q1 to Q2 as shown in Diagram 1. There will be a decrease in quantity demanded if price increases on the same demand curve as given in Diagram 2, and there as a result of an increase in price from P’ to P”, quantity falls from Q’ to Q” causing a movement from E to F on demand curve d2.
Change in demand, on the other hand, means more or less demand at the same price. In such a case, a shift takes place in the demand curve. A shift in demand curve refers to an increase or decrease in demand when income increases or decreases at a given price of the commodity, In fact, a shift in demand can also take place due to change in prices of other goods, change in tastes and other factors at a given price of the commodity. Take the case of change in income. For a normal good, at a given price, an increase in income shifts the entire demand curve to the right, say from d1to d2 in Diagram 3, which is also called an increase in demand, whereas a decrease in income shifts the demand curve from d’ to d” in Diagram 4 towards the left which is also called decrease in demand when the price is P0.