Which one of the following may lead to a movement along the demand curve of a commodity?
Change in its price
Understanding Demand Curve Movement vs. Shift
In economics, the demand curve illustrates the relationship between the price of a commodity and the quantity demanded by consumers at that price, assuming all other factors remain constant (ceteris paribus).
There are two main ways the representation of demand changes on a graph:
- Movement Along the Demand Curve: This happens when the quantity demanded of a commodity changes only because of a change in the commodity's own price. As the price goes up or down, we move along the existing demand curve to a new point showing the new quantity demanded at the new price.
- Shift of the Demand Curve: This happens when the quantity demanded of a commodity changes at every given price. This is caused by factors other than the commodity's own price, such as changes in consumer income, prices of related goods, tastes and preferences, expectations, etc. A shift means an entirely new demand curve is created, either to the right (increase in demand) or to the left (decrease in demand).
Analyzing Factors Affecting Demand
Let's look at the factors mentioned in the options and see how they affect the demand curve for a specific commodity.
| Factor | Effect on Demand Curve | Explanation |
|---|---|---|
| Change in the commodity's own price | Movement along the curve | As the price changes, the quantity demanded changes according to the law of demand, causing a movement from one point to another on the same curve. |
| Change in price of other commodities (substitutes or complements) | Shift of the curve | If the price of a substitute good changes, consumers may buy more or less of the original commodity at the same price. If the price of a complementary good changes, it affects the demand for the original commodity. These change demand at all price levels. |
| Change in income of the consumer | Shift of the curve | For most goods (normal goods), higher income leads to higher demand at all prices. For some goods (inferior goods), higher income leads to lower demand at all prices. This changes demand at all price levels. |
| Change in tastes and preferences of consumers | Shift of the curve | If consumers' preferences for a commodity increase, they will demand more at every price level. If preferences decrease, they demand less at every price level. This changes demand at all price levels. |
Identifying the Cause of Movement Along the Demand Curve
Based on our analysis, a movement along the demand curve for a commodity is caused solely by a change in the price of that specific commodity. The other factors listed (price of other commodities, income, tastes/preferences) cause the entire demand curve to shift, not just a movement along it.
Therefore, among the given options, only a change in the commodity's own price will result in a movement along its demand curve.
Revision Table: Demand Concepts
| Concept | Cause | Representation |
|---|---|---|
| Movement along demand curve | Change in the commodity's own price | Moving from one point to another on the same demand curve. |
| Shift of demand curve | Change in non-price factors (income, tastes, price of related goods, etc.) | Creating an entirely new demand curve (to the left or right). |
Additional Information: The Law of Demand
The concept of movement along the demand curve is closely linked to the Law of Demand. This fundamental law states that, ceteris paribus (all other things being equal), as the price of a good or service increases, the quantity demanded decreases, and vice versa. This inverse relationship between price and quantity demanded is why the demand curve slopes downwards. A movement along the curve simply illustrates this relationship graphically as the price changes.
Understanding the difference between movements and shifts is crucial in economics because it helps distinguish between changes caused by the price of the good itself and changes caused by external factors affecting consumer behavior.
Similar Questions
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Select the correct answer using the code given below:
Important Questions from Microeconomics
Which of the following statement is correct?
I. Indifference curves are sloping from left to right.
II. Higher indifference curve gives a higher level of utility.
If in a production process, all inputs are tripled, which of the following statements follows?
I. If the output is tripled, then decreasing returns to scale apply.
II. When the output is doubled, constant returns to scale apply.
III. If the output is more than tripled, then increasing returns to scale apply.
A market, in which there are a large number of firms, homogeneous product, infinite elasticity of demand for an individual firm and no control over price by firms, is termed as________.
If the two goods are substituted, then the indifference curve will be:
Arrange the following market structures in the increasing order of pricing power to firms.
(A) Monopolistic competition
(B) Perfect competition
(C) Duopoly
(D) Monopoly
(E) Oligopoly
Choose the correct answer from the options given below:
