Question

Which of the following statements about demand curves is true?

a) if price falls and quantity demanded increases, this is represented by a movement along a given demand curve.
b) if price falls and quantity demanded increases, this is represented by a shift of the demand curve.
c) if price falls and quantity demanded increases, this can be represented by either a movement along a given demand curve, or a shift of the demand curve.

Answer 1

When demand increases or decreases, the entire demand curve shifts either to the right or to the left respectively, affecting quantity demanded at every price level.

Step-by-step explanation:

When an increase in demand occurs, quantity demanded would increase at every price level, so the entire demand curve would shift to the right.

When demand decreases, the entire demand curve would shift to the left, so there would be fewer quantity demanded at each price level.

A shift of the demand curve to the left indicates a decrease in demand, while a shift to the right indicates an increase in demand across all price points.

For example, if a new video game is released that uses innovative technology, demand for the game could increase, shifting the demand curve to the right.

On the other hand, if the game system the video game is played on is replaced by a newer system, demand for the game would shift to the left.