If you appreciate our work, consider supporting us:

QUESTION:

4. Movements along versus shifts of demand curves

Consider the market demand for coffee.
Complete the following table by indicating whether an event will cause a movement along the demand curve for coffee or a shift of the demand curve for coffee, holding all else constant.
Event
Movement Along
Shift
A decrease in the price of tea (a substitute for coffee)
An increase in the number of consumers
An increase in the price of coffee

ANSWER:

Event
Movement Along
Shift
A decrease in the price of tea (a substitute for coffee)
An increase in the number of consumers
An increase in the price of coffee
Points:
1 / 1
Close Explanation
Explanation:
The demand curve for coffee shows the relationship between the price of coffee and the quantity of coffee demanded by consumers, assuming that all of the determinants of demand are held constant. The following list displays determinants of demand, which are the factors that affect the quantity of coffee consumers want to buy at a given price:
Factors That Determine Demand
•Price of a related good (complement or substitute)
•Income of consumers
•Tastes of consumers
•Number of consumers
•Expectations of consumers
Therefore, if the price of coffee changes, the result is a movement along the demand curve from the old price to the new one. However, if a change occurs in any of the factors that determine demand, the result is a shift of the demand curve. The following graphs illustrate an example of a movement along the demand curve and a shift of the demand curve:

Posted by Cleveland on August 30, 2024
Back to Questions