Multiple Choice
Which of the following changes would cause a shift in the demand curve for a good (rather than a movement along the curve)?
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3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
Multiple Choice
Which of the following is most likely to cause a shift in a consumer’s demand curve for coffee (not merely a movement along the curve)?
A
A change in the quantity of coffee demanded due to a price change
B
A change in the price of coffee
C
A change in the price of coffee with all other factors held constant
D
An increase in consumer income, assuming coffee is a normal good
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 occurs when the price of the good changes, affecting the quantity demanded, while all other factors remain constant.
Recognize that a change in the price of coffee causes a movement along the demand curve, not a shift. This is because the demand curve itself represents the relationship between price and quantity demanded, holding other factors constant.
Identify factors other than the price of coffee that can cause the demand curve to shift. These include changes in consumer income, tastes and preferences, prices of related goods (substitutes or complements), expectations, and the number of buyers.
Focus on the effect of an increase in consumer income when coffee is a normal good. For normal goods, an increase in income leads to an increase in demand at every price level, which shifts the demand curve to the right.
Conclude that an increase in consumer income (assuming coffee is a normal good) causes a shift in the demand curve, unlike changes in the price of coffee which cause movements along the curve.
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