Which of the following statements is true regarding a movement along a demand cu

Question

Which of the following statements is true regarding a movement along a demand curve?

It is unaffected by changes in consumer tastes and their income.

It describes the relationship between quantity sold and price, assuming other factors are constant.

It implies the profits of a company have improved significantly.

It helps determine the marginal revenue a company has to achieve in order to be profitable.

It takes into consideration variation in all the demand factors when plotting the demand curve.

Explanation / Answer

The Demand Curve is the graph depicting the relationship between the price of a certain commodity or good and the amount or quantity of that good that consumers are willing and able to purchase at any given price. Movement in Demand Curve happens when change in price of goods causes change in its demand in quantity of that good. Movement along the demand curve is strictly a function of changes in price. Nothing else. If the price goes up, consumers will purchase less; if the price goes down, they will buy more.Thus

(A) False as Consumer income increases the price of the good thus it is affected.

(B) True

(C) False since irrelavant

(D) False

(E) False sine this is called Elasticity of Demand and not movement along demand curve.

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