Page 94 - Krugmans Economics for AP Text Book_Neat

figure 5.3

A Movement Along the Demand Price of
Curve Versus a Shift of the coffee beans
Demand Curve (per pound) A shift of the
demand curve . . .
The rise in the quantity demanded when going
from point A to point B reflects a movement along $2.00
the demand curve: it is the result of a fall in the
price of the good. The rise in the quantity de- 1.75
. . . is not the
manded when going from point A to point C A C same thing as
reflects a change in demand: this shift to the right 1.50 a movement along
is the result of a rise in the quantity demanded at 1.25 the demand curve.
any given price.
B
1.00

0.75
0.50 D 1 D 2

0 7 8.1 9.7 10 13 15 17
Quantity of coffee beans
(billions of pounds)

When economists talk about a “change in demand,” saying “the demand for X in-
creased” or “the demand for Y decreased,” they mean that the demand curve for X or Y
shifted—not that the quantity demanded rose or fell because of a change in the price.
Understanding Shifts of the Demand Curve

Figure 5.4 illustrates the two basic ways in which demand curves can shift. When econo-
mists talk about an “increase in demand,” they mean a rightward shift of the demand
curve: at any given price, consumers demand a larger quantity of the good or service than

figure 5.4

Shifts of the Demand Curve Price
Any event that increases demand shifts the
demand curve to the right, reflecting a rise
in the quantity demanded at any given
price. Any event that decreases demand Increase
shifts the demand curve to the left, reflect- in demand
ing a fall in the quantity demanded at any
given price.

Decrease
in demand

D 3 D 1 D 2

Quantity

52 section 2 Supply and Demand