Figure 3-4 Shifts of and Movements Along the Demand Curve
shows the combined effect of an increase in demand, shown by a
rightward shift in the whole demand curve, and an upward movement to
the left along the new demand curve caused by an increase in price. The
increase in demand causes an increase in quantity demanded at the initial
price, whereas the movement along the new demand curve causes a
decrease in the quantity demanded. Whether quantity demanded rises or
falls overall depends on the relative magnitudes of these two changes.
An increase in demand means that the demand curve shifts to the right,
and hence quantity demanded is higher at each price. A rise in price
causes a movement upward and to the left along the demand curve, and
hence quantity demanded falls. The demand curve is originally and
price is which means that quantity demanded is. Suppose demand
increases to which means that at any particular price, there is a larger
quantity demanded; for example, at quantity demanded is now
Now suppose the price rises above This causes a movement up and to
the left along and quantity demanded falls below As the figure is
drawn, the quantity demanded at the new price is less than but
greater than So in this case the combined effect of the increase in
D 0
p 0 , Q 0
D 1 ,
p 0 , Q
p 0.
D 1 , Q 1.
p 2 Q 1
Q 0.