Macroeconomics

‭A‬‭change‬‭in‬‭the‬‭price‬ ‭of‬‭the‬‭product‬‭itself‬ ‭affects‬‭its‬‭quantity‬‭demanded‬ ‭causing‬ ‭a‬‭movement‬‭along‬ ‭the‬ ‭same‬‭demand‬‭curve.‬‭However,‬‭other‬‭factors,‬‭referred‬‭to‬‭as‬ ‭demand‬‭determinants‬ ‭,‬‭can‬‭also‬‭affect‬ ‭the‬ ‭demand‬ ‭for‬ ‭a‬ ‭product.‬ ‭These‬ ‭determinants‬ ‭include‬‭consumers’‬‭incomes,‬‭tastes,‬‭and‬‭other‬‭factors‬ ‭that‬‭will‬‭be‬‭discussed‬‭soon.‬ ‭Any‬‭change‬‭in‬‭these‬‭determinants‬ ‭causes‬ ‭a‬‭shift‬‭of‬‭the‬‭demand‬‭curve‬ ‭to‬ ‭a‬ ‭new‬ ‭position,‬ ‭and‬ ‭hence‬ ‭a‬ ‭change‬ ‭in‬ ‭demand‬ ‭(as‬ ‭a‬ ‭whole),‬ ‭rather‬ ‭than‬ ‭a‬ ‭change‬ ‭in‬ ‭quantity‬ ‭demanded.‬ ‭Movement‬ ‭along‬ ‭the‬ ‭curve:‬ ‭When‬ ‭there‬ ‭is‬ ‭a‬ ‭change‬ ‭in‬ ‭the‬ ‭price‬ ‭of‬ ‭a‬ ‭product‬ ‭while‬ ‭all‬ ‭other‬‭factors‬ ‭influencing‬‭demand‬‭remain‬‭constant‬ ‭(ceteris‬‭paribus)‬ ‭,‬‭it‬‭leads‬‭to‬‭a‬‭movement‬‭along‬‭the‬‭demand‬‭curve.‬ ‭This means consumers are willing to buy more or less of the product at different price points.‬ ‭●‬ ‭An‬ ‭increase‬ ‭in‬ ‭the‬‭price‬‭of‬‭a‬‭product‬‭reduces‬‭its‬ ‭quantity‬‭demanded‬ ‭.‬‭This‬‭is‬‭reflected‬ ‭by‬ ‭an‬ ‭upward‬ ‭movement‬ ‭along‬ ‭the‬ ‭demand‬‭curve‬‭known‬‭as‬‭a‬ ‭contraction‬‭of‬‭demand‬ ‭.‬ ‭On the graph below, this is illustrated by the arrow moving from point X to Y.‬ ‭●‬ ‭A‬ ‭decrease‬ ‭in‬ ‭the‬‭price‬‭of‬‭a‬‭product‬‭increases‬‭its‬‭quantity‬‭demanded.‬‭This‬‭is‬‭reflected‬ ‭by‬‭a‬‭downward‬‭movement‬‭along‬‭the‬‭demand‬‭curve‬‭known‬‭as‬‭an‬ ‭extension‬‭of‬‭demand‬ ‭.‬ ‭This is illustrated by the arrow moving from point X to Z.‬

‭In‬ ‭this‬ ‭case,‬ ‭there‬ ‭is‬ ‭a‬ ‭change‬ ‭in‬ ‭quantity‬ ‭demanded‬ ‭which‬ ‭is‬ ‭the‬ ‭specifc‬ ‭amount‬ ‭of‬ ‭a‬ ‭product‬ ‭or‬ ‭service that consumers are willing to purchase at a particular price.‬ ‭Shifts‬ ‭of‬ ‭the‬‭demand‬‭curve:‬ ‭Factors‬‭other‬‭than‬‭price‬‭(i.e.,‬‭non-price‬‭factors)‬‭influence‬‭the‬‭purchasing‬ ‭decisions‬‭of‬‭consumers.‬‭Such‬‭factors‬ ‭shift‬‭the‬‭demand‬‭curve‬ ‭causing‬ ‭a‬‭change‬‭in‬‭demand‬ ‭(≠‬‭quantity‬

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