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Movement along and shift of the demand curve

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Please explain the difference between a movement along and shift of the demand curve. Show the impact on the equilibrium price and quantity that results from; (1) an increase in demand, (2) an increase in supply, (3) an increase in both supply and demand. Give an example of the role of supply and demand in decision making.

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Solution Summary

Difference between movement along and shift of the demand curve; an example of the role of supply and demand in decision making.

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Because the demand curve reflects how quantity demanded changes with price, the curve does not move when prices change. Any price change is already reflected in any curve by a change in quantity. However, other factors can cause the curve to shift. Anything that would cause people to buy more or less of a good at the same price cause the demand curve to shift. For example, a greater population ...

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