Chapter 14: Problem 499

What is the difference between an increase in demand and an increase in the quantity demanded?

Short Answer

Expert verified

The difference between an increase in demand and an increase in the quantity demanded is that an increase in demand is a shift in the entire demand curve due to factors other than price, such as consumers' preferences, income levels, or expectations about future prices. This results in a higher quantity demanded at each price level. On the other hand, an increase in the quantity demanded is a movement along the existing demand curve in response to a change in price, specifically when price decreases, leading to a higher quantity demanded while holding other factors constant.

Step by step solution

Define Increase in Demand

An increase in demand occurs when there is a shift in the entire demand curve to the right. This is caused by changes in factors other than price, such as consumers' preferences, income levels, population growth, or expectations about future prices. As a result, the quantity demanded at each price level is higher.

Define Increase in Quantity Demanded

An increase in the quantity demanded refers to the movement along the demand curve (which represents the relationship between price and quantity demanded) in response to a change in price. It occurs when price decreases, leading to a higher quantity demanded, assuming all other factors remain constant.

Compare the Two Concepts

Increase in demand and increase in quantity demanded are different concepts. An increase in demand is a shift in the entire demand curve, while an increase in quantity demanded is a movement along the existing demand curve. The former is influenced by factors other than price, whereas the latter is exclusively due to changes in price.

Provide Example of Increase in Demand

An example of an increase in demand: Suppose there is a recent study that finds eating apples improves health significantly. This will result in an increase in consumer preference for apples, causing the demand curve for apples to shift to the right. Consequently, people will purchase more apples at each price level, reflecting an increase in demand.

Provide Example of Increase in Quantity Demanded

An example of an increase in quantity demanded: Let's say the price of apples suddenly drops due to a surplus of apples in the market. As the price drops, people are more likely to purchase apples, leading to a greater quantity demanded. This movement along the demand curve reflects an increase in the quantity demanded of apples.