In this article, we’re going to talk about the difference between a change in demand and a change in quantity demanded. So a change in price holding everything else constant just changing the price of a good or service is going to lead to a change in the quantity demanded of that good or service and that’s going to be a movement along the demand curve. If we had our demand curve we just got our standard downward sloping demand curve, we’re gonna be moving from one point to another, for example, let’s say if we moved from P1 to P2 what we have is that as we’re decreasing the price, we’re increasing the quantity demanded. Because our P is in the “Y” axis and our Q is in the “X” axis. So we’re just moving along this curve.
Now a change in something other than price for example people’s incomes, people’s tastes and preferences, the price of a substitute or complement good, and so forth will lead to a change in demand which although it sounds similar to change in quantity demanded it’s not the same thing. We’re not talking about a movement along the demand curve. Now we’re talking about an actual shift. So let’s say in our demand curve, tastes and preferences of consumers changes so that they increase their demand for this good what is going to happen is here is demand curve 1 we’re going to shift this to the right and we’re gonna have a new demand curve we’ll call it D2 and so we will actually have a shift in the demand curve.
That’s what we mean when we say there’s been a change in demand. So if someone says demand for oil is increasing what they’re talking about is there’s been a rightward shift in the demand curve. Now if we’re talking about just simply what would happen if we just changed the price but nothing else? That’s a change in quantity demanded and we don’t have a shift we just have a movement along the curve. So let me show you an example it’ll make it a little bit easier to understand let’s think about the market for Pink Jeans. Let’s say that our demand schedule looks like the following
So we’ve got at $100 price people are demanding twelve pairs of pink jeans. When the price is increased to $200 they’re demanding less they’re demanding nine pairs etc, all the way up to $500. So we can graph this out and I’ve graphed out our demand curve. so here is our demand curve and what is gonna happen is that we could change our price, let’s just say hypothetically that our price was at $500 so at a price of $500 P = 500, Q which is our quantity demanded equals 0. What if the price were to change and now it’s a price of $300, well we see that at P = 300 Q is 6. At a price of 300 the quantity demanded is 6. So what we’ve done is we moved along the demand curve we haven’t drawn a new curve we haven’t shifted or anything like that we moved from one point to another point. We just moved from one point to another but we stayed on the same demand curve because there was simply a change in price.
What if there was something other than a change in price there was a change in preferences, for example, you see a famous musician somebody who’s very famous they are wearing these pink jeans and then consumers say “Hey, I want some pink jeans.” So now there’s a change in preferences and there’s an increase in demand for pink jeans. We’ve got a new quantity demanded schedule, so our old demand schedule was as follows
but now we have a new demand schedule where at each price consumers are demanding more, they’re demanding more than the good it used to be at $100 that consumers were demanding 12 units of pink jeans but now they’re demanding 15. Now what we can do is we’ll draw a new demand curve we’ll call that D2. Our first demand curve was D1 and now we’ve got D2 and what has happened is that we have shifted the demand curve to the right because there has been an increase in demand.
so now think about it what has happened here, when we were changing just the price we were changing what that was doing was it was a corresponding change in quantity demanded we just moved along the curve we didn’t create a new curve but when there’s a change in something other than the price (a non-price change) preferences, people’s income and so forth then we’re not just moving along the curve when there’s a change in demand we’re actually creating an entirely new curve we’re shifting it either to the right or to the left depending on whether there’s an increase or decrease in demand. The reason the curve is shifting is when there’s a non-price change at each price point there’s a new quantity demanded. So we have to create an entirely new curve. When something other than the price changes we say it’s a change in demand but when only the price changes all else constant then we just have a movement along the curve and it’s a change in quantity demanded.