AP_Krugman_Textbook

When economists talk about a “change in demand,” saying “the demand for Xin-

creased” or “the demand for Ydecreased,” they mean that the demand curve for Xor Y

shifted—notthat 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 rightwardshift of the demand

curve: at any given price, consumers demand a larger quantity of the good or service than

52 section 2 Supply and Demand

figure 5.3

A Movement Along the Demand

Curve Versus a Shift of the

Demand Curve

The rise in the quantity demanded when going

from point Ato point Breflects a movement along

the demand curve: it is the result of a fall in the

price of the good. The rise in the quantity de-

manded when going from point Ato point C

reflects a change in demand: this shift to the right

is the result of a rise in the quantity demanded at

any given price.

0 7 8.1 9.7 10 1513 17

Quantity of coffee beans

(billions of pounds)

$2.00

1.75

1.50

1.25

1.00

0.75

0.50

Price of

coffee beans

(per pound)

D 1 D 2

AC

B

A shift of the

demand curve...

... is not the
same thing as
a movement along
the demand curve.

figure 5.4

Shifts of the Demand Curve

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

shifts the demand curve to the left, reflect-

ing a fall in the quantity demanded at any

given price.

Price

Quantity

D 3 D 1 D 2

Decrease

in demand

Increase

in demand