Multiple Choice
Which of the following is NOT a determinant of demand (i.e., does NOT shift the demand curve) for a good?
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3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
Multiple Choice
The market demand for a product has increased (i.e., the demand curve has shifted right) if:
A
The quantity demanded increases because the product's price falls.
B
At every price, consumers are willing and able to buy a larger quantity than before.
C
The product's price rises and the quantity demanded rises along the same demand curve.
D
The quantity demanded decreases because the product's price rises.
Verified step by step guidance1
Understand the difference between a movement along the demand curve and a shift of the demand curve. A movement along the demand curve happens when the price of the product changes, causing quantity demanded to change, but the demand curve itself does not move.
Recognize that a shift of the demand curve means that at every price level, the quantity demanded changes. This happens due to factors other than the product's own price, such as changes in consumer preferences, income, prices of related goods, or expectations.
Analyze the statement 'The quantity demanded increases because the product's price falls.' This describes a movement down along the demand curve, not a shift of the demand curve.
Consider the statement 'At every price, consumers are willing and able to buy a larger quantity than before.' This means the entire demand curve shifts to the right, indicating an increase in demand.
Evaluate the other options: 'The product's price rises and the quantity demanded rises along the same demand curve' is inconsistent with the law of demand, and 'The quantity demanded decreases because the product's price rises' describes a movement along the demand curve, not a shift.
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