Shifts Versus Movements Along the Demand Curve
Summary
TLDRThis video explains the key differences between movements along the demand curve and shifts of the demand curve. Movements along the curve are due to price changes, affecting the quantity demanded while holding other factors constant. On the other hand, shifts in the demand curve occur when external factors like preferences, income, or the prices of substitutes and complements change, influencing the overall demand for a good at various prices. The presenter clarifies these concepts with examples, emphasizing the importance of understanding both dynamics in economics.
Takeaways
- π Movements along the demand curve reflect changes in quantity demanded due to changes in price, holding everything else constant.
- π΅ A decrease in price leads to an increase in quantity demanded, and an increase in price leads to a decrease in quantity demanded along the demand curve.
- π Shifting the demand curve means a change in demand at all possible prices, not due to price changes, but other factors.
- β¬ οΈ A leftward shift in the demand curve indicates a decrease in demand, meaning fewer units are demanded at the same price.
- β‘οΈ A rightward shift in the demand curve represents an increase in demand, meaning more units are demanded at the same price.
- π Factors such as tastes, preferences, and income can shift the demand curve, impacting demand at all price levels.
- 𧩠The price of substitutes and complements also affects the demand curve, as consumers may switch products or change behavior based on related goods' prices.
- πΌ When discussing income, it's important to distinguish whether the good is normal, as this determines how income changes affect demand.
- π A change in quantity demanded is different from a change in demand; the former is about price changes, while the latter involves other factors.
- π Movements along the curve are about own-price effects, while shifts in the curve are influenced by external factors affecting consumer behavior.
Q & A
What is the main difference between shifting the demand curve and movements along the demand curve?
-Shifting the demand curve refers to changes in demand caused by factors other than price, while movements along the demand curve are caused by changes in the price of the good itself.
What does a movement along the demand curve represent?
-A movement along the demand curve represents changes in the quantity demanded that occur due to changes in the price of the good.
How does a price decrease affect the quantity demanded in a movement along the demand curve?
-When the price decreases, the quantity demanded increases, resulting in a movement down along the demand curve.
What happens to the quantity demanded if the price increases during a movement along the demand curve?
-If the price increases, the quantity demanded decreases, leading to a movement up along the demand curve.
What does it mean when the demand curve shifts to the left?
-A shift to the left of the demand curve indicates a decrease in demand, meaning that at every possible price, the quantity demanded is less than before.
What does a rightward shift of the demand curve indicate?
-A rightward shift of the demand curve indicates an increase in demand, meaning that at every possible price, the quantity demanded is greater than before.
What factors can cause the demand curve to shift?
-Factors such as changes in tastes and preferences, income, and the price of substitutes or complements can cause the demand curve to shift.
How does an increase in income affect the demand curve for normal goods?
-For normal goods, an increase in income causes the demand curve to shift to the right, indicating an increase in demand.
What role do substitutes and complements play in shifting the demand curve?
-If the price of a substitute increases, the demand for the original good may increase, shifting the demand curve to the right. Conversely, changes in the price of complements can either increase or decrease demand, causing the demand curve to shift.
How can changes in tastes and preferences lead to a shift in the demand curve?
-If a product becomes more popular, demand increases, causing a rightward shift of the demand curve. If a product becomes less popular, demand decreases, resulting in a leftward shift.
Outlines
π Introduction to Demand Curve Shifts and Movements
The speaker introduces the topic of the video, which is the distinction between shifting the demand curve and movements along the demand curve. The two concepts are linked to changes in demand and quantity demanded, respectively. Movements along the curve reflect changes in quantity demanded due to price changes, while shifts in the curve signify changes in overall demand.
π Movements Along the Demand Curve Explained
The focus is on explaining movements along the demand curve, where changes in quantity demanded are solely driven by price changes. The demand curve illustrates the relationship between price and the quantity demanded while holding other factors constant. An example is provided where a decrease in price leads to an increase in quantity demanded, and vice versa.
π Example of Movement Along the Demand Curve
The speaker provides a practical example of moving along the demand curve. Starting at a price of 6 units, the demand is 5 units. When the price drops to 4 units, the quantity demanded increases to 7 units. Conversely, raising the price back to 6 leads to a decrease in quantity demanded, demonstrating how price fluctuations affect movement along the demand curve.
π Shifting the Demand Curve
The speaker shifts the discussion to changes in demand that cause the entire demand curve to shift, either to the left (decrease) or right (increase). Unlike movements along the curve, shifting indicates that the quantity demanded at every price level has changed, regardless of the price itself.
π‘ Example of Shifts in the Demand Curve
An example is given to illustrate demand curve shifts. At a fixed price of 6 units, an increase in demand shifts the curve to the right, increasing the quantity demanded from 5 to 7.75 units. Conversely, a decrease in demand shifts the curve to the left, reducing quantity demanded to 2 units. This applies across all prices, not just the example price.
π Factors That Cause Shifts in Demand
Several factors that cause demand curve shifts are discussed. These include changes in tastes and preferences, income, and the prices of substitutes or complements. The speaker emphasizes the importance of identifying whether a good is 'normal' or 'inferior' when considering the impact of income on demand. Additionally, price changes in related goods like substitutes or complements can also cause shifts.
π Conclusion and Summary
The speaker concludes by reiterating the key difference between movements along the demand curve and shifts in the curve. Movements are driven by changes in the price of the good, while shifts result from various factors influencing the relationship between price and quantity demanded. The video ends with a friendly message encouraging viewers to like, subscribe, and leave comments.
Mindmap
Keywords
π‘Demand curve
π‘Movement along the demand curve
π‘Shift of the demand curve
π‘Quantity demanded
π‘Price
π‘Increase in demand
π‘Decrease in demand
π‘Substitutes
π‘Complements
π‘Income
Highlights
Introduction to the difference between shifting the demand curve and movements along the demand curve.
Explanation of movements along the demand curve, focusing on changes in quantity demanded due to changes in price.
Clarification that a movement along the demand curve happens when only the price changes, while everything else remains fixed.
Example of price movement: lowering the price from 6 to 4 leads to an increase in quantity demanded from 5 to 7 units.
Inversely, increasing the price from 4 to 6 results in a decrease in quantity demanded, moving up along the curve.
Take-home message: movements along the curve are due to price changes of the good itself.
Introduction to shifting the demand curve, where price remains constant but the quantity demanded changes at every price.
A shift to the left represents a decrease in demand, while a shift to the right represents an increase in demand.
Example of a shift in demand: at a price of $6, demand increases from 5 units to about 7.75 units when the curve shifts from D to D2.
Likewise, a decrease in demand (shift from D to D1) results in only 2 units being demanded at the same $6 price.
Shifts in the demand curve affect all possible prices, changing the amount demanded at each price.
Factors that cause shifts in the demand curve include changes in tastes and preferences, which affect product popularity.
Income changes can also shift the demand curve, especially depending on whether the good is normal or inferior.
Prices of substitutes or complements can shift demand curves; if a substituteβs price increases, demand for our product may rise.
Final take-home message: movements along the curve relate to changes in price, while shifts involve multiple factors affecting demand.
Transcripts
hi everyone in this video I'm going to
be talking about the difference between
shifting the demand curve and movements
along the demand curve and I'm going to
be talking about these two different
types of changes in two different ways
so when we shift the demand curve we're
going to be referring to changes in
demand and when we're moving along the
demand curve we're going to be talking
about a change in the quantity demanded
so let's focus on movements along first
and here's our demand curve and to
understand movement along we have to
understand what this demand curve is
doing which is telling us a relationship
between all the possible prices that a
good can can take and the quantity
demanded at each one of those prices and
we are holding everything else fixed so
it follows from this that when we're
moving along the curve what we're doing
is we're tracking changes in quantity
demanded that are due to changes in the
price only so for instance if we started
at price is equal to 6 we can see from
our demand curve here that we're
demanding 5 units at that price if we
were to lower that price to 4 we would
move along the demand curve we would get
an increase in the quantity demanded and
that's up to 7 here that works the other
way say we wanted to increase the price
from 4 to 6 this would cause because
we've increased the price a decrease in
the quantity demanded we would move up
along that curve and this works for all
the prices that are applicable or
appropriate for the demand curve that
you're working with what's important the
take-home message is that movements
along the curve concerned changes in the
quantity demanded which are due to
changes in the price of the good itself
let's contrast movements along with
shifting the whole curve now so we can
shift to the left that's a decrease in
demand say from D to D 1 like I have on
the screen here or an increase in demand
would be a shift of the curve to the
right say to a curve like D 2 here the
big difference between movements along
and shifts in the curve is that when
we're shifting the demand curve we're
not changing the price but rather saying
that for all of the
possible prices the quantity demanded at
each one of those prices is either more
or less than it used to be so for
instance if we held the price fixed at
some amount let's just see six dollars
we can see at the original demand curve
D that we are demanding five units at
that price if we experienced an increase
in demand let's just say that a demand
shifted out to d2 we can see at that
same price that now more is demanded and
that looks to me about seven point seven
five likewise if we experienced a
decrease in demands let's just say from
D to D one we can see at that same price
that now only two units are demanded and
that's not just for price is equal to
six but for all of the possible prices
if we shift around the demand curve we
are changing the amount that is demanded
at each one of those prices so what sort
of things are going to shift around our
land curve so the sorts of factors that
come into play when we're talking about
shifts are usually things like tastes
and preferences so how popular something
is or isn't income so you got income
changes around this can shift the demand
curve as well but we have to make sure
if we're talking about income though
we're clear about whether the good is
normal or not because if a good isn't
normal then an increase in income may
lead to a decrease in demand and lastly
the price of substitutes or complements
so if the price of a good that is really
similar to your own product increases
then the demand for our own product
might increase if consumers switch over
and the opposite is true
likewise with complements so goods that
are consumed really really well with
your own product the price of those
complements change around that we might
see shifts the demand curves as well
okay that's it so that's the difference
between movements along that concern
changes in own price and shifts which
there's a lot of factors here that can
change the relationship between price
and quantity demanded at those prices
are from the consumers perspective
because that's what we're talking about
when we're thinking about demand okay
thanks so much I hope you guys are doing
well and enjoying studying I can
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other videos give me a comment let me
know how you're going have a great night
or day and I hope the video helped
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