IB examination questions for economy (page 33)

Distinguish between a shift of the demand curve for a product and a movement.

It is important to identify the differences between a movement along a demand curve and a shift in the demand curve. When there is a change in price, it would  have a significant effect like a change in movement along a demand curve. It is also changes the Qd (quantity in  demanded). Say, for example, there’s an increase in car prices from $40 to $50. What happens is that it decreases the quantity demanded from 50 units to 40 units instead, its inversely proportional .As you can see, the price change results in a movement just along a given demand curve.  If there is any change from the variables that may act upon the quantity demanded, it creates a shift in the demand curve in other words a change .

A way to differentiate the movement and shift in the demand curve is by identifying the actions of the population that affect the change in the movement and shift in the demand.

There are four different factors that affect the change in movement of demand.  The first consumers income, expectations, population change, tastes , and fashion . If the movement works towards the right, it could mean that there is a boost in the  income that is not refundable .

On the other hand, there are four factors that shift in the demand curve. First, it could be the changes in consumer earnings. The demand for products will be less if there’s a recession. Next would be the population change. If the population will increase, the demand shifts to the left and will go higher. The demand would be less if there are limited numbers in the populations. Third would be the preferences of consumers. if the preference for a specific product levels up, the demand curve will have to shift to the good. Lastly, the prices of related goods matter. Once the related products changes, the demand curve will have to change as well. It could be suggested as two. It could either be a substitute or a complement. Substitutes are the ones that can be considered as a replacement. On the other hand, complements are products that are consumed together.

In conclusion  movement in the demand curve depends on consumer income, expectations, population change, tastes, and trends (for movement) while a shift relies on consumer earnings, population change, preference of consumers, and the prices of related goods.

2) Several factors should be taken into account when economist /people refer to the causes of an increase in a product´s demand. There are two specific ways to represent the effects these factors can have on the demand curve.

1) A shift to the right may occur due to external factors.

2) The rise of demand along the curve, these may occur because increase in population

In this text I am referring to a bicycle specifically, it is possible to create and see a variation in a demand curve due to many factors, I am going to focus primarily in competition. If the productions of mediums of transport increase in price, this will affect the investment of consumers because generally the go with the cheaper one in these case bicycles. If this where to happen, then the more economic alternative the bicycles will become more “popular” this will make the demand rise. Sense this makes an increase in demand; the demand curve would shift to the right.

It is possible to see a positive effect, a movement to the right in a demand curve of bicycles, if the population of young people (kids, mid age adults) were to double the demand consequently would double or increase shifting the demand, this example is  unrealistic, but could also be possible.  This could only happen under the ideal situation. Economists could not make an affirmation they could only predict it happens.

In conclusion, many possible factors can affect in different ways the demand curve for common  product such bicycles.

sources: 

www. wikipedia.org/economia.13124./positivo=demanda

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