Theory question 103
Theory of DemandSection B (answer three questions only from this section)
With the aid of diagrams, explain what is meant by a change in: (a) the quantity demanded; (b) demand
Show the model answer
(a) Change in quantity demanded: caused only by a change in the commodity's own price, other things being equal. Shown as a movement along the same demand curve – down the curve (extension) when price falls, up the curve (contraction) when price rises. Diagram: one demand curve with two points, e.g. price P1 to P2 and quantity Q1 to Q2.
(b) Change in demand: caused by factors other than the good's own price – income, tastes, prices of related goods, population, expectations, taxes. Shown as a shift of the whole curve: to the right (increase, more bought at every price) or to the left (decrease). Diagram: D0 shifting to D1 (right) or D2 (left) at the same price.
Diagrams must have labelled axes (price, quantity) and curves.
Movement along vs shift of the curve.