Diagrams that illustrate movements along a demand curve

📈 The Allocation of Resources – Demand

What is a Demand Curve?

A demand curve shows the relationship between the price of a good and the quantity that people are willing to buy. The curve usually slopes downwards, meaning that when the price falls, people want more of the good, and when the price rises, they want less.

Key Concepts

• Price – the amount of money paid for one unit of a good.
• Quantity Demanded – how many units people want to buy at that price.
• Movement along the Curve – changes in quantity demanded caused by a change in price.
• Shift of the Curve – changes in quantity demanded at every price caused by factors other than price (e.g., income, preferences).

Illustrating Movements Along the Demand Curve

Let’s look at a simple example with pizza slices 🍕.

When the price drops from $5 to $3, the quantity demanded rises from 30 to 55 slices. This is a movement along the demand curve.

Analogy: Coffee Shop ☕

Imagine a coffee shop that sells a latte for $4. If the shop lowers the price to $3, more students will buy lattes. The graph of price vs. quantity demanded will shift downwards along the same curve. This is similar to how a supermarket might lower the price of a popular cereal to attract more buyers.

Exam Tip Box

Practice Question

1. Suppose the price of a smartphone drops from £700 to £600. Explain whether this change represents a movement along the demand curve or a shift of the demand curve.
2. Draw a simple diagram (using a table) showing the new quantity demanded if the quantity demanded at £700 was 100 units and at £600 it is 150 units.

Key Takeaway

A movement along the demand curve shows how quantity demanded changes when the price changes, keeping all other factors constant. Remember: the curve itself stays the same; only the point on the curve moves.