Movements Along and Shifts of Demand

A change in the good's own price causes a movement along an existing demand curve—a change in quantity demanded. A non-price factor that changes willingness to buy at every price shifts the whole curve—a change in demand.

Common demand shifters

Income, tastes, prices of related goods, expectations, and the number of buyers shift demand. Demand for a normal good usually shifts right as income rises; an inferior good may shift left. A higher substitute price increases demand, while a higher complement price reduces it.

Use a fixed-price test

Choose any reference price. If buyers want more at that same price after an event, demand shifted right; if they want less, it shifted left. Coffee becoming cheaper is movement along coffee demand. Tea becoming dearer can shift coffee demand right because tea is a substitute.

Income requires classification: normal-good demand rises with income, while inferior-good demand may fall. “Inferior” describes a statistical relationship, not quality. Expectations also require dates: expected future price increases can raise demand today without implying higher future demand.

Ask first whether the changing variable is the good's own vertical-axis price or another condition. Then name the direction. Avoid “a higher price reduces demand”; say “a higher price reduces quantity demanded.” A rightward demand shift may raise equilibrium price, but that conclusion requires adding supply.