2. Movements along versus shifts of demand and supply curves . Consider the dema

Question

2. Movements along versus shifts of demand and supply curves.

Consider the demand for donuts

Which of the following would cause a movement along the demand curve that is a change in the quantity demanded of donuts.

Check all that apply.

A. Which of the following would cause a movement along the demand curve (that is, a change in the quantity demanded) for donuts?

1. A change in the number of consumers

2. A change in the price of coffee (a complement for donuts)

3. A change in the price of donuts.

Which of the following would cause a shift of the demand curve for donuts? Check all that apply

1.A change in the number of consumers

2. A change in consumers tastes that makes them desire more donuts

3. A change in the price of coffee (a complement for donuts)

Explanation / Answer

Q1. A movement along the demand curve for a commodity that is change in quantity demanded of a respective commodity happens when there is change in price of said commodity while other factors affecting demand for said commodity remain unchanged.

The movement along the demand curve for donuts can happen only if there is change in price of donuts while other factor affecting demand for donuts remain unchanged.

Thus, the correct answer is option (3).

Q2. A shift of the demand curve for a commodity happens when there is change in factors other than price of the respective commodity.

In other words, demand curve for a commodity shifts when price of the commodity remains unchaged while other factors affecting demand for said commodity changes.

Other factors include -

Price of related goods - Related goods are of two types - Substitute goods and complementary goods. Any change in price of substitute goods or complementary goods of a commodity results in a shift in demand curve for said commodity.

Income of consumer - Change in income of consumer also results in a shift in demand curve for said commodity.

Tastes and preferences - Change in tastes and preferences also results in a shift in demand curve for said commodity.

Number of consumers - Change in number of consumers in the market for a commodity also results in a shift in demand curve for said commodity.

The shift of the demand curve for donuts can happen only if the price of donuts remain unchanged while other factor affecting demand for donuts changes.

All the given options represents fators other than price with respect to demand for donuts. Change in them will shift the demand curve for donuts.

Thus, all options are correct.

Correct answer is option (1), (2), (3).

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