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Which of the following factors would result solely in a movement along the demand curve for a particular good? a
Which of the following factors would result solely in a movement along the demand curve for a particular good?
a. a change in the prices of related goods
b. a change in the size of the population
c. both a change in the price of that good and a change in the size of the population
d. a change in the price of that good
Expert Solution
Correct answer is (d): A change in the price of a good results in a movement along the demand curve for that good. When the price of a good x increases, the demand for that good contracts and when its price decreases, the demand for it increases. This is shown as a movement along the demand curve as all other factors are assumed to remain constant.
If any other determinants of demand change, then that results in a shift of the entire demand curve because the demand changes at every price of x.
So that if price of a related good changes, the demand curve of x shifts to the left or right. If the related good is a substitute of good x, then an increase in price of that good will lead to an increase in demand of x at every price, leading to a rightward shift of demand curve of x. However, if the related good is a complement of good x, then an increase in price of that good will lead to a decrease in demand of x, leading to a leftward shift of demand curve of x.
Similarly, a change in the size of population shifts the demand curve to the left or right depending on the change. If the size of population increases, the demand curve for x will shift to the right.
Only when the price of good x changes will there be a movement solely along the demand curve, so correct option is 9 (d).
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