Final answer:
Movements along demand curves are caused by price changes affecting quantity demanded, while shifts of demand curves are due to non-price factors affecting demand. Price changes result in moving up or down the curve, and non-price changes cause the entire curve to shift, impacting the equilibrium.
Step-by-step explanation:
The correct answer is option 1: Movements along demand curves refer to changes in quantity demanded due to changes in price, while shifts of demand curves refer to changes in quantity demanded due to factors other than price. When the price of a good changes, we see movement along the demand curve, either up or down, which reflects a change in quantity demanded.
In contrast, when there is a change in a non-price determinant of demand, such as consumer income, preferences, price of related goods, etc., the entire demand curve shifts either left or right. This signifies that at every price, more or less of the good would be demanded. It is important to note that a shift in the demand curve affects the equilibrium quantity and price and results in a movement along the supply curve, but does not shift the supply curve itself.