Multiple Choice
Which of the following can cause a shift in a market demand curve for a good (i.e., change demand at every price) rather than a movement along the demand curve?
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3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
Multiple Choice
In microeconomics, what can cause an entire demand curve for a good to shift (rather than a movement along the curve)?
A
A change in consumers' income (for a normal good), holding the good's own price constant
B
A change in the good's supply curve, with demand determinants unchanged
C
A change in quantity demanded caused by moving to a different point on the same demand curve
D
A change in the good's own price, holding all other determinants of demand constant
Verified step by step guidance1
Understand that a demand curve shows the relationship between the price of a good and the quantity demanded, holding all other factors constant.
Recognize that a movement along the demand curve occurs when the price of the good changes, causing a change in quantity demanded but not shifting the curve itself.
Identify that a shift of the entire demand curve happens when a non-price determinant of demand changes, such as consumer income, tastes, prices of related goods, expectations, or number of buyers.
Focus on the specific example of a change in consumers' income for a normal good: an increase in income typically increases demand at every price, shifting the demand curve to the right, while a decrease shifts it to the left.
Note that changes in the supply curve or changes in the good's own price do not shift the demand curve; supply changes affect supply, and price changes cause movements along the demand curve.
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