Figure 3-2 An Increase in the Demand for Apples
demand curve—to the relationship between desired purchases and all the
possible prices of the product.
The term demand therefore refers to the entire relationship between
the quantity demanded of a product and the price of that product. In
contrast, a single point on a demand schedule or curve is the quantity
demanded at that point. This distinction between “demand” and “quantity
demanded” is an extremely important one and we will examine it more
closely later in this chapter.
Shifts in the Demand Curve
A demand curve is drawn with the assumption that everything except the
product’s own price is being held constant. But what if other things
change, as they often do? For example, consider an increase in average
household income while the price of apples remains constant. If
consumers spend some of their extra income on apples, the new quantity
demanded cannot be represented by a point on the original demand
curve. It must be represented on a new demand curve that is to the right
of the old curve. Thus, a rise in income that causes more apples to be
demanded at each price shifts the demand curve for apples to the right, as
shown in Figure 3-2. This shift illustrates the operation of an important
general rule.