Changes in the amount (quantity) demanded

Changes in the amount of the commodity demanded are due to changes in the price of commodity in question. All other variables affecting demand are assumed constant. This is illustrated by a movement along a demand curve.
 
An increase in the amount of the commodity demanded is concerned with the movement along a demand curve downwards [a to b in Figure 2.10] and it is due to a fall in the price of the commodity in question. It is at times referred to as an extension in the demand.
 
At price OP2, the amount demanded is OQ2 and when price reduces to OP-j, more of the commodity OQ^ is demanded. If the price increases from OPT to OP2, the amount demanded reduces from OQ-, to OQ2 (a movement ' from b to a]. This is also referred to as contraction indemand. Changes in the amount demanded illustrate the law of demand, which states that the higher price, the greater the amount demanded and vice versa.

Changes in demand.
 
A change in demand means that at a constant price OP0, more (OQ-,) or less (OQ2) is demanded (Figure 2.11). This is illustrated by a shift of the demand curve either to the right (an increase in demand) or to the left (a decrease in demand).

ab is an increase in demand (see direction of arrow from D0 to D1.
ac is a decrease in demand (see direction of arrow from D0 to D2).
An increase in demand is a situation when at a constant price, more of the commodity is demanded. This is illustrated by the shift of the
demand curve to the right (shift from D0 Lo D1). More may be demanded at a constant price due to the following;
  • An increase in the consumer's income.
  • Favourable taste.
  • A rise in the price of a substitute.
  • A fall in the price of a complement,
  • An expected rise in the future price of the commodity in question.
  • An increase in the size of population.
  • A more less equal distribution of income.
  • Subsidisation of consumers.
  • A rise in the advertising expenditure on the commodity in question.
  • A fall in the advertising expenditure on a substitute.
  • A rise in the advertising expenditure on the complement,
« Previous | Next »