Page 27 - DECO101_MICRO_ECONOMICS_ENGLISH

Micro Economics

Notes
Figure 2.1: Increase in Demand

2. Decrease in Demand: With opposite changes in factors affecting demand, the demand
curve shifts to dx . This is shown in Figure 2.2.
2
Figure 2.2: Decrease in Demand

It is important to clearly distinguish between a movement along a given demand curve (as a
result of change in price) from a shift in demand (as a result of change in income, price of related

commodities and tastes). The first is known as a change in quantity demanded and the second is
known as a change in demand.
Movement along a demand curve is different from shift in demand curve. Movement along a
demand curve is the change in a point on the demand curve. Shift in the demand curve means
the change in the whole demand curve. In Figure 2.3, movement from Q to Q is “expansion” of
1
2
demand and from Q to Q is “contraction” of demand. The contraction and expansion along a
1
3
demand curve depends on the change in “quantity demanded”.

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