MOVEMENT AND SHIFT OF DEMAND CURVES

Lecture - 03
MOVEMENT ALONG THE DEMAND CURVE.
Movement along the demand curve occurs when there is
a change in the own price. As price and quantity is
inversely related. Hence , reduction in the price causes a
downward movement . This means that there is an
increasing demand.
On the other hand increase in price causes an upward
movement. This means that there is a decreasing
demand.
GRAPH: MOVEMENT ALONG THE DEMAND CURVE

Fig. 1.3) Movement along the demand curve

SHIFT OF A DEMAND CURVE
So we have seen due to price change we have the
movement along the demand cure.
There are some other factors of demand that we have like
the taste and preferences of the consumer for a
commodity, income of the comsumer,prices of the
related commodity etc.
A shift of a demand curve occurs when we have a change
in any of the factors like the taste and preferences of the
consumer for a commodity, income of the
comsumer,prices of the related commodity
SHIFT OF A DEMAND CURVE: INCOME CHANGE
Income of the consumer is one determinants of demand .
If the income increases then there is an increase in the
demand. This implies that for the same level of price,
quantity demanded will be higher. And hence demand
curve will shift rightward or upward or outward.

If income decreases then for the same level of price,

quantity demanded will fall. hence demand curve will
shift leftwards or downward or inward.
GRAPH: INCOME INCREASE

Fig 1.4: Rightward Shift of a demand curve due to income

increase
TASTES AND PREFERNCES INCREASE

Suppose due to change in

fashion or habit , the tastes
and preferences of the
consumers increases for a
particular commodity.This
implies for the same level
of price quantity demanded
will higher and demand
curve will shift rightward.
PRICES OF THE RELATED COMMODITY CHANGES : SUBSTITUTES
AND COMPLEMENTS

Assume that coffee is substitute and sugar is

complement of tea.
Now , if the price of coffee increases , people will
purchase less of coffee and the demand for tea will
increase. Hence demand curve for tea will shift
rightward.
On the other hand, if price of sugar increases, people will
purchase less of sugar. As tea has to be consumed with
sugar people will not be interested to buy more tea.
Hence , demand for tea will decrease and demand curve
of tea will shift leftward/inward.
PRICES OF THE RELATED COMMODITY CHANGES