Changing the Quantity
A Change in Quantity Demanded
A change in quantity demanded is a movement along a given demand curve. A change in demand is a shift of the demand curve. These alternatives can be illustrated with the negatively-sloped demand curve presented in this exhibit. This demand curve captures the specific one-to-one, law of demand relation between demand price and quantity demanded. The five demand determinants are assumed to remain constant with the construction of this demand curve.
A Change in Quantity Demanded: A change in quantity demanded, which is only triggered by a change in demand price, is a movement along the demand curve. Click the [A Price Change] button to demonstrate.
A Change in Demand: A change in demand, which is triggered by a change in any of the five demand determinants, is a shift of the demand curve. Click the [A Determinant Change] button to demonstrate.
An Important Difference
Why is this difference so important? The answer is as simple as cause and effect. The demand curve is used (together with supply) to explain and analyze market exchanges. The sequence of events follows a particular pattern.
First, a demand (or supply) determinant changes.
Second, this determinant change causes the demand curve (or supply curve) to shift.
Third, the change in demand (or supply) causes either a shortage or a surplus imbalance in the market. The market is in a temporary state of disequilibrium.
Fourth, the shortage and surplus imbalance causes the price of the good to change.
Fifth, the change in price causes a change in quantity demanded (and supplied).
Sixth, the change in quantity demanded (and supplied) eliminates the shortage or surplus and restores market equilibrium.
The key conclusion is that demand (and supply) determinants, which induce changes in demand (and supply), are the source of instability in the market. The change in price, which induces a change in quantity demanded (and supplied) is the means of eliminating the instability and restoring equilibrium.