|Economics Basics||F shifts vs movement|
What Is Economics
Macro and Microeconomics
Production Possibility Frontier (PPF)
Specialization and Comparative Advantage
Demand and Supply
The Law of Demand
The Law of Supply
Time and Supply
Supply and Demand Relationship
F. Shifts vs. Movement
The availability of substitutes
Income available to spend on the good
Income Elasticity of Demand
For economics, the “movements” and “shifts” in relation to the supply and demand curves represent very different market phenomena:
Like a movement along the demand curve, a movement along the supply curve means that the supply relationship remains consistent. Therefore, a movement along the supply curve will occur when the price of the good changes and the quantity supplied changes in accordance to the original supply relationship. In other words, a movement occurs when a change in
quantity supply is caused only by a change in price, and vice versa.
2. Shifts – A shift in a demand or supply curve occurs when a good’s quantity demanded or supplied changes even though price remains the same. For instance, if the price for a bottle of beer were $2 and the quantity of beer demanded increased from Q1 to Q2, then there would be a shift in the demand for beer. Shifts in the demand curve imply that the original
demand relationship has changed, meaning that quantity demand is affected by a factor other than price. A shift in the demand relationship would occur if, for instance, beer were all of a sudden the only type of alcohol available for consumption.
Conversely, if the price for a bottle of beer were $2 and the quantity supplied decreased from Q2 to Q1, then there would be a shift in the
supply of beer. Like a shift in the demand curve, a shift in the supply curve implies that the original supply relationship has changed, meaning that quantity supplied is affected by a factor other than price. A shift in the supply curve would occur, if, for instance, a natural disaster caused a mass shortage of hops: beer manufacturers would therefore be forced to supply less beer for the same price.
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