IBonomicsMovements and Shifts of Demand and Supply CurvesSL
MicroeconomicsA compact diagram comparing movements along demand and supply curves with shifts of the demand and supply curves.
Curves and elements
- Shift of demand curve
- The whole demand curve moves left or right because of a change in a non-price determinant such as income, tastes, or the price of related goods.
- Shift of supply curve
- The whole supply curve moves left or right because of a change in a non-price determinant such as costs of production, technology, taxes, or subsidies.
- Movement Along Demand Curve
- A change in the good’s own price causes movement from one point to another on the same demand curve.
- Movement Along Supply Curve
- A change in the good’s own price causes movement from one point to another on the same supply curve.
- Key difference
- Price changes cause movements along curves, while non-price changes cause shifts of curves.
Key explanations
- 1
A movement along the demand curve is caused by a change in the good’s own price, leading to an extension or contraction in demand.
- 2
A movement along the supply curve is caused by a change in the good’s own price, leading to an extension or contraction in supply.
- 3
A shift of the demand curve occurs when a non-price determinant of demand changes, causing demand to increase or decrease at every price.
- 4
A shift of the supply curve occurs when a non-price determinant of supply changes, causing supply to increase or decrease at every price.
Example exam question
Explain the difference between a movement along a curve and a shift of a curve, using demand and supply diagrams.
Show example answer
A movement along a demand or supply curve is caused by a change in the good’s own price, while a shift of the curve is caused by a non-price determinant changing, all things being equal.
