Final answer:
The multiple linear demand model represents a constant linear relationship between price and quantity demanded, while the multiple multiplicative demand model indicates proportional changes. Shifts in demand or supply curves signify a change in non-price determinants affecting the overall market, whereas movements along the curves result from price changes of the good itself. These shifts and movements alter the equilibrium price and quantity in a market.
Step-by-step explanation:
To differentiate between the multiple linear demand model and multiple multiplicative demand model in economics, we need to consider the functional form of the equations that represent these models. A linear demand model, such as Qd = 16 - 2P, where Qd denotes the quantity demanded and P the price, suggests that changes in price result in constant changes to quantity demanded; this relationship is graphically represented by a straight line. Conversely, a multiplicative demand model implies a proportional or percentage change in quantity demanded for each percentage change in price, with the relationship typically being nonlinear.
With regards to shifts of demand or supply versus movements along a demand or supply curve, the difference lies in the nature of change in the market. A movement along a demand or supply curve occurs due to a change in the price of the good itself, leading to a change in the quantity demanded or supplied. A shift in the demand or supply curve, however, happens when a non-price determinant of demand (such as income, tastes, or prices of related goods) or supply (such as production costs or technology) changes, implying a new relationship between price and quantity at every price point.
If, for example, a demand curve experiences a shift, this suggests that at any given price, consumers now wish to purchase a different quantity than before the shift. Graphically, a shift in a demand or supply curve means that the whole curve moves to the left or right (for demand) or up or down (for supply), corresponding to decreases or increases in demand or supply, respectively. Solving models with algebra involves determining the new equilibrium price and quantity after such a shift has occurred.