1. Demand is defined by the quantity
of a good or service a consumer is willing to buy and is able to buy at a given
price and time period; and the Law of Demand states that if the price falls, the amount
demanded of the product is increased. These are all shown on the demand curve, many
things can change the demand in a certain product, it can be a movement along
the curve or a change in gradient or as parallel shift to the right of left of
said curve, to differentiate them, all we need to know are the factors of
change in the curves.
The main differences between a movement along a demand
curve and a shift in the curve itself have to do with price factors. A movement
along a curve is simply a price factor, when the price increases, the demand
decreases, and viceversa. The shift on a curve, on the other hand, is affected
by a non-price factor, for example, income increases, price of other products,
government policies, etc.; so to summarize, the difference is just price, and whether
it’s involved or not.
Imagine a demand curve with no changes on a regular product. As the price goes up, the demand goes down, and the movement along a demand curve is done by a price factor, so it's a movement along the curve. This is seen better on the diagram below:
For what you can see, the movement along a demand curve is see by a change in price. This is a movement along a demand curve.
Imagine a demand curve with no changes on a regular product. As the price goes up, the demand goes down, and the movement along a demand curve is done by a price factor, so it's a movement along the curve. This is seen better on the diagram below:
For what you can see, the movement along a demand curve is see by a change in price. This is a movement along a demand curve.
Here’s
an example, imagine you had an original salary of $1,000 per month, the salary
then increases by a 20%, which means you now have an income of $1,200 per
month, ceteris parabus, the total
normal goods that you buy should also increase by 20%, which makes a shift to
the right in the demand curve, while as if your income stays the same, the
amount you can buy is remained constant so the curve didn’t show any change. Let's take soda cans as an example, when your income increases you are able to buy more soda cans, so the demand curve moves to the right, as shown on the diagram:
As we see the curve move to the right, at any price, you can buy more soda cans, swince the quantity demanded increased.
Take another example, involving a government policy, nothing
to do with money. The case study of Italy is a good example. The Italian
government used a ban on smoking in public, this made less available areas to
smoke, and the demand curve will shift to the left: also enforced by a fine of
$250 to violators, because the actual cost didn’t increase, just the areas
allowed to smoke have been reduced. This decreased demand without price being
involved, so the curve shifted to the left. This can be seen on the diagram below:
The tax set by the cigarette consumption didn't affect the prize, but it affected the will of the consumers to buy cigarettes, the buy of cigarettes came down at any set price, which is a shift to the left of the demand curve.
The tax set by the cigarette consumption didn't affect the prize, but it affected the will of the consumers to buy cigarettes, the buy of cigarettes came down at any set price, which is a shift to the left of the demand curve.
So to
summarize, it’s all about the price that determines movement from a shift. When
there’s a change and price isn’t involved, then it’s more than likely a shift
to the left or right.
2. The first determinant for an
increase in the demand of bicycles is a government policy. Think of the case
study here, in Bogotá. On the month of February, there’s a day called, no-car
day. Where particular vehicles (personal cars or non-public transport) are
banned for one day, what do we students do? We go to school on a bike. Without
a transport, we can’t do anything in this modern world, so due to this
government day, more people are buying bicycles to keep up, so the demand curve
shifts to the right. This is seen on the diagram below:
The second of the two main
factors is the comparison of the other products with the bicycle. Let’s take as
an example, the prices of bicycles and skateboards, ceteris parabus, if the price of skateboards increase, the
preference, due to price, will go to the bicycles. The demand for the
skateboards decrease and the demand for bicycles increase. To see this better imagine the graph above as the bicycle demand curve, and the one below the demand curve for skateboards:
Great post! I like how you have clearly explained the important terms in the question! After you had explained the terms in question 1, you went right to what the question was asking. While answering the question, you drew some diagrams to support you answer and to show evidence. You also gave examples and that makes the reader comprehend more into depth. I like how you gave examples and you draw a diagram to back up your example. On the second question you described why the demand curve would shift to the right and you explained by and also explained it in a diagram. I recommend you to put an introduction next time.
ResponderEliminarWell done!
Eusebio, for the first question, you have clearly explained the difference between a``shift to the right´´, ``shift to the left´´ and ``movement along the demand curve´´. I would have had the definition of movement on a paragraph with the graph below it.
ResponderEliminarFor the second question, I agree with Jacqui. In my opinion, I would have added an introduction to the answer. For your second part of the answer, I would have used a graph that represents the concept in a clear way as it will make it more easier to understand your answer. In the last example, I would have had mentioned in a clear way what D and D1 represented.
With every different definition, you have used examples which really help the reader to associate the definition with an example. The definitions and the use of graphs at the end of each definition were good and clear since in my opinion, graphs were like a conclusion (summary) of the previous terms mentioned.
You have done a good post with clear and detailed definitions and examples. Your idea of having a little description under the graphs of the first question is really good as it explains the relation between the graph and the example.
Fátima Crespo