Pearson Edexcel · A-Level · Economics B
Course version: 9EB0 · Version from Sept 2015
C) The distinction between movements along a demand curve and shifts of a…
Full specification wording
Demand: c) The distinction between movements along a demand curve and shifts of a demand curve
Understanding the distinction between movements along a demand curve and shifts of the curve is crucial for market analysis.
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- Point 3 of 4
- 4 key terms
Study notes
From the checked teaching notes for this specification point.
The idea
Understanding the distinction between movements along a demand curve and shifts of the curve is crucial for market analysis. A movement along the demand curve is caused solely by a change in the price of the good itself, resulting in an extension (increase in quantity demanded) or contraction (decrease in quantity demanded). In contrast, a shift of the entire demand curve occurs when a non-price determinant of demand changes, such as consumer income, tastes, or the prices of substitute goods. For instance, a successful advertising campaign shifts the demand curve to the right, meaning more is demanded at every price, whereas a price cut merely causes a downward movement along the existing curve.
What earns the marks
- A movement along the demand curve is caused only by a change in the price of the product itself.
- A fall in price causes an extension of demand, while a rise in price causes a contraction of demand.
- A shift of the demand curve is caused by changes in non-price factors, such as income, trends, or the price of related goods.
- An outward shift represents an increase in demand at all price levels, while an inward shift represents a decrease in demand.
Common mistakes and how to put them right
Confusing the cause of a shift with the cause of a movement.
Put it right: Only a change in the good's own price causes a movement, while non-price factors cause a shift.
Using the terms 'extension' and 'increase' interchangeably.
Put it right: 'extension' refers to a movement along the curve due to a price fall, while 'increase' refers to an outward shift of the entire curve.
Writing the index number on the baseline when labelling a new demand curve.
Put it right: Use a superscript, such as shifting from D to D¹, to denote the new curve.
Exam tips
- When illustrating a shift, draw directional arrows between the original and new demand curves to clearly show the change.
- Explicitly state whether a scenario causes a 'movement along' or a 'shift of' the demand curve in your written analysis.
- Memorise the acronym PIRATES (Population, Income, Related goods, Advertising, Tastes, Expectations, Seasons) to recall the conditions that shift the demand curve.
Try the lesson
The start of the Demand: c) The distinction between movements along a demand curve and shifts of a demand curve lesson, made from checked teaching notes for this specification point.
Have a go first
Which of the following events will cause a movement along the existing demand curve for electric vehicles, rather than a shift of the demand curve?
Listen
Understanding the distinction between movements along a demand curve and shifts of the curve is crucial for market analysis. A movement along the demand curve is caused solely by a change in the price of the good itself, resulting in an extension (increase in quantity demanded) or contraction (decrease in quantity demanded). In contrast, a shift of the entire demand curve occurs when a non-price determinant of demand changes, such as consumer income, tastes, or the prices of substitute goods. For instance, a successful advertising campaign shifts the demand curve to the right, meaning more is demanded at every price, whereas a price cut merely causes a downward movement along the existing curve. A strong answer earns marks for these points. A movement along the demand curve is caused only by a change in the price of the product itself. A fall in price causes an extension of demand, while a rise in price causes a contraction of demand. A shift of the demand curve is caused by changes in non-price factors, such as income, trends, or the price of related goods. An outward shift represents an increase in demand at all price levels, while an inward shift represents a decrease in demand. Exam tip: When illustrating a shift, draw directional arrows between the original and new demand curves to clearly show the change.
See it
Key words
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Movement along the demand curve
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Shift of the demand curve
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Extension of demand
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Contraction of demand
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See every definition
- Movement along the demand curve
- Caused solely by a change in the price of the good itself, resulting in an extension or contraction of demand.
- Shift of the demand curve
- Occurs when a non-price determinant of demand changes, such as consumer income, tastes, or the prices of substitute goods.
- Extension of demand
- An increase in quantity demanded caused by a fall in price, shown as a movement along the existing curve.
- Contraction of demand
- A decrease in quantity demanded caused by a rise in price, shown as a movement along the existing curve.
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