[Joseph_E._Stiglitz,_Carl_E._Walsh]_Economics(Bookos.org) (1)

In practice, both effects are often present. Thus, in panel C of Figure
3.7, the movement from point A to point C—where the quantity
demanded has been increased from Q 0 to Q 2 —consists of two parts: a
change in quantity demanded resulting from a shift in the demand
curve (the increase in quantity from Q 0 to Q 1 ), and a movement
along the demand curve due to a change in the price (the increase in
quantity from Q 1 to Q 2 ).
The distinction will be important for understanding how quantities
and prices are determined once we combine our analysis of demand
with an analysis of supply. For example, along a given demand curve
for gasoline, a rise in the price of gasoline causes a reduction in the
quantity demanded. In contrast, the introduction of a new rapid transit
system in a city would shift the demand curve for gasoline to the left;
in this example, at each price of gasoline, the quantity demanded would
be less because alternative transportation services are available.
WRAP UP
SHIFTS VERSUS MOVEMENTS ALONG
DEMAND CURVES
A change in price, given a demand curve, is reflected in a movement
along the given demand curve.
A shift in the demand curve causes the quantity demanded to change,
at a given price.
FUNDAMENTALS OF DEMAND,
SUPPLY, AND PRICE 1
DEMAND DECLINES AS PRICE RISES
As the price of a good increases, the quantity demanded falls. Changes
in factors other than price—such as incomes, consumer tastes, or
the prices of other substitutes or complements—shift the demand
curve.
Supply
Economists use the concept of supply to describe the quantity of
a good or service that a household or firm would like to sell at a
particular price. Supply in economics refers to such seemingly
PRICE OF CANDY BARS (p)
PRICE OF CANDY BARS (p)
PRICE OF CANDY BARS (p)
p 0
A
p 1
Q 0 Q 1
QUANTITY OF CANDY BARS (Q )
New
demand
curve
B
p 0
A
Q 0 Q 1
QUANTITY OF CANDY BARS (Q )
A
B
C
B
Demand
curve
Original
demand
curve
A B
p 0
New
demand
C
p 1
curve
Original
demand
curve
Q 0 Q 1 Q 2
QUANTITY OF CANDY BARS (Q )
Figure 3.7
MOVEMENT ALONG THE DEMAND CURVE
VERSUS SHIFT IN THE DEMAND CURVE
Panel A shows an increase in quantity demanded caused
by a lower price—a movement along a given demand
curve. Panel B illustrates an increase in quantity demanded
caused by a shift in the entire demand curve, so that a
greater quantity is demanded at every market price.
Panel C shows a combination of a shift in the demand
curve (the movement from point A to B) and a movement
along the demand curve (the movement from B to C).
SUPPLY ∂ 61