Table of Contents
Movement along a demand curve
Other things remaining constant quantity demanded will change due to the price change of the commodity. Demand decreases when the price of a commodity is increased. The decreases in demand due to the increase in price is known as contraction of demand. If the price of the commodity is decreased, then the quantity demanded will increases. The increases in demand due to the decrease in price is known as extension of demand.
The extension or the contraction of demand due to the change in price expands the existing demand curve towards left or right. The expansion of existing demand curve in either side by the effect of price change is known as movement along a demand curve.
Let’s assume that quantity demanded is 2 units when the price is Rs 8 per unit. When the price of the commodity decreases to Rs 6 and Rs 4, quantity demanded will increase to 3 and 4 units. These combinations of price-quantity relationship give the demand curve BD. If the price decreased to Rs 2 again, quantity demanded will be 5 units. In this situation, DE part of the demand curve will expand and new demand curve becomes BE. Thus, the increase in demand expands the demand curve toward right. Similarly, if the price increases to Rs 12, then quantity demanded will decreases to 1 units and existing demand curve towards its left or right is the movement of a demand curve. Movement along a demand curve is due to the effect of price change of the commodity.
Shift in Demand Curve
Other things remaining constant, quantity demanded is changed by the price change of the commodity. If the non-price factors affecting demand are changed, quantity demanded will change without the change in price of the commodity. The positive effect of non-price factors increases the demand which is known as increases in demand. The negative effect of these factors reduces the demand and known as decrease in demand. This change of demand shifts the demand curve either upwards from its original position.