1. What is the difference between a movement along and shift of the demand curve
ID: 1176233 • Letter: 1
Question
1. What is the difference between a movement along and shift of the demand curve? Let us consider the demand for DVDs. What will cause a movement along the demand curve for DVDs and what will cause the demand curve for DVDs to shift? How will the curve shift? To the right or the left? Why?
2. Ice cream can be a normal good but for some people vanilla ice cream can be an inferior good. Discuss how that is possible. Give an example of a good that you consider normal and one that you consider inferior.
Explanation / Answer
As we know that various factors influence the demand for a commodity. These factors are broadly classified as 1. Own price of the commodity. 2 other factors influencing demand ( income levels, price of related goods, tastes and preferences etc. ) When the change in the price of the commodity leads change in quantity demanded. It results in the movement along the same demand curve. When a change in a factor other than the price of the commodity leads to change in demand. It results in the shift of the demand curve 2 a movement along the demand curve for DVDs is caused by the change in the price of the DVDS. Demand curve for DVDs will shift due to a change in factors other than the Price of DVDs e.g. income level of the consumer, price of related goods, change in tastes and preferences. The curve will shift to its right if the factors influencing the demand for DVDs (other than their own price) cause increase in the demand of DVDs. The demand curve shift to its left if the factors influencing the demand for DVDs (other than their own price) cause decrease in the demand of DVDs. . Ice cream can be a normal good but for some people vanilla ice cream can be an inferior good may be because very high income of those some people. Generally normal goods have direct relationship with income. And inferior goods have inverse relationship with income For me Cornato ice creame is normal good . but vanilla ice creame is an inferior good . because when my income increases I prefer to buy Cornato ice creame, but when I earn less I buy vanilla ice creame
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