Difference Between Movement and Shift Demand Curve
Movement vs Shift Demand Curve
It is important to identify the differences between a movement along a demand curve and a shift in the demand curve. When there is a change in price, it would have a significant effect like a change in movement along a fixed demand curve. It is also coined as the change in quantity demanded. Say, for example, there’s an increase in car rental prices from $30 to $40. What happens is that it decreases the quantity demanded from 40 units to 30 units instead.
As you can see, the price change results in a movement just along a given demand curve. So if there is any change from the variables that may act upon the quantity demanded, it creates a shift in the demand curve or, in other words, a change in demand. The word coined may just sound subtle, but take note; it is highly vital. Let’s say that the income in the neighborhood increases because a manufacturing company is able to give employees overtime pay. The increase in income will allow the people to rent more cars.
In a similar rental price, the quantity demanded is now higher compared to before. The quantity demanded will equally be met by the quantity supplied. As a result, the whole demand curve will shift. So it is safe to say that the shift in the demand curve will remarkably alter the equilibrium position. The shift in the demand curve will change the market equilibrium to a higher and more positive result. You do have to remember, though, that if the demand curve will shift to the opposite side, it means that the equilibrium price and quantity will go down.
Another way to differentiate the movement and shift in the demand curve is by identifying the factors that affect the change in the movement and shift in the demand. There are four different factors that affect the change in movement of demand. It would include consumer income, expectations, population change, tastes, and trends. If the movement works towards the right, it could mean that there is a boost in the non-refundable income. This could be brought about by the taxes decreased and an increase in wages. The movement could also be because of the increase in the value of goods. A good example would be the computers because they are now more dominant. What is more is that advertising plays a major role in the increase in price for the substitute that it entails.
On the other hand, there are four factors that shift in the demand curve. First, it could be the changes in consumer earnings. The demand for products will be less if there’s a recession. Next would be the population change. Think about it carefully. If the population will increase, the demand shifts to the left and will go higher. The demand would be less if there are limited numbers in the populations. Third would be the preferences of consumers. You can’t really tell what they prefer. But think of this, if the preference for a specific product levels up, the demand curve will have to shift to the good side. Of course, you could never tell when it would shift to the negative side. After all, a fad ends when there’s too much supply, and discounts would have to be given just so items would be sold. Lastly, the prices of related goods matter. Once the related products change, the demand curve will have to change as well. It could be suggested as two. It could either be a substitute or a complement. Substitutes are the ones that can be consumed as a replacement. On the other hand, complements are products that are consumed together.
1. Movement in the demand curve depends on consumer income, expectations, population change, tastes, and trends (for movement) while a shift relies on consumer earnings, population change, preference of consumers, and the prices of related goods.
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