What is the difference between a shift in the demand curve and a movement along the demand curve?

The factors that affect movement along the demand curve and those that cause a shift in the curve are distinct and different. Marketers must figure out which forces are in play when analyzing the changes in the markets for their products.

Table of Contents Show

Movement along the demand curve
Shift in the Demand Curve
Evaluation – Time period
Content: Movement in Demand Curve Vs Shift in Demand Curve
Comparison Chart
Definition of Movement in Demand Curve
Definition of Shift in Demand Curve
Video: Movement Vs Shift in Demand Curve

An increase in the willingness of consumers to buy will shift that curve to the right. A reduction in consumers' willingness to buy will shift it to the left. The most significant causes of shifts in the demand curve are as follows:

Price of related goods: An increase in the demand for one product may affect the demand in a related good. For example, if the price of bagels goes up, this might decrease the demand for cream cheese to spread on the bagels. Conversely, an increase in the price of pizzas could increase the demand for hamburgers.

Income: The demand for products increases as consumers' incomes goes up. People will go out more often to expensive restaurants as their incomes increase. On the other hand, demand for inferior goods will decline with increases in consumer incomes. People will ride the bus less when they get a raise and can afford to buy a car.

Number of buyers: Changes in the composition of the population has an affect on the demand for certain products. As a greater percentage of people become older, the demand for hearing aids and nursing care will increase.

Tastes: Consumers' tastes are constantly changing. Fashions that were popular in the 60s are not marketable today. The rapid increase in the popularity of cell phones wiped out the demand for pagers. The increase in demand for chicken corresponds with a similar decline in beef consumption.

Expectations: Consumers' expectations about the future affect their buying habits. If people become concerned about the direction of the economy, and they worry about losing their jobs, they might decide to delay their purchase of a new car. If they believe that prices of electronics will fall, they will postpone buying those products.

Movement along the demand curve is strictly a function of changes in price. Nothing else. If the price goes up, consumers will purchase less; if the price goes down, they will buy more.

However, the amount of change along the demand curve is different for each product. This is known as the elasticity of demand.

Elasticity is a measure of the rate of change in demand in relation to a change in price. The formula is a ratio of percentage changes:

Price elasticity of demand = Percentage change in demand/Percentage change in price

Some products are necessities, and consumers will continue to purchase them, regardless of the price. Example of necessities are groceries and gas. Consumers do not alter their food purchases with price increases, and they do not change their driving habits when gas prices rise.

Other items, such as consumer durables, are highly sensitive to price increases, and demand will fall drastically with increases in prices. A washing machine is not an absolute necessity, and its purchase can be postponed, if prices increase.

Setting the right price for a product is difficult, and it requires an understanding of the forces in the market that drive consumers to buy. Movement along the demand curve is a direct function of price changes, whereas other factors can cause a shift in the demand curve.

A shift in demand means at the same price, consumers wish to buy more. A movement along the demand curve occurs following a change in price.

Movement along the demand curve

A change in price causes a movement along the demand curve. It can either be contraction (less demand) or expansion/extension. (more demand)

Contraction in demand. An increase in price from $12 to $16 causes a movement along the demand curve, and quantity demand falls from 80 to 60. We say this is a contraction in demand

Expansion in demand. A fall in price from $16 to $12 leads to an expansion (increase) in demand. As price falls, there is a movement along the demand curve and more is bought.

A change in price doesn’t shift the demand curve – we merely move from one point of the demand curve to another.

Shift in the Demand Curve

A shift in the demand curve occurs when the whole demand curve moves to the right or left. For example, an increase in income would mean people can afford to buy more widgets even at the same price.

The demand curve could shift to the right for the following reasons:

The good became more popular (e.g. fashion changes or successful advertising campaign)
The price of a substitute good increased.
The price of a complement good decreased.
A rise in incomes (assuming the good is a normal good, with positive YED)
Seasonal factors.

Evaluation – Time period

In the real world, a higher price could cause a movement along the demand curve, but in the long-term, it could cause a shift as consumers respond to the persistently higher prices.

For example, if there is an increase in the price of petrol, there would be a movement along the demand curve, and a smaller quantity would be bought. However, there is likely to be only a small fall in demand because the demand for petrol tends to be quite price inelastic.

However, in the long term, the demand curve may shift to left as well because people respond to the higher price by looking for alternatives, for example, they buy an electric car and so no longer need petrol.

In economics, demand is defined as the quantity of a product or service, that a consumer is ready to buy at various prices, over a period. Demand Curve is a graph, indicating the quantity demanded by the consumer at different prices. The movement in demand curve occurs due to the change in the price of the commodity whereas the shift in demand curve is because of the change in one or more factors other than the price.

The demand curve is downward sloping from left to right, depicting an inverse relationship between the price of the product and quantity demanded.

Most of the economics student, find it difficult to understand the difference between movement and shift in the demand curve, so take a look at the article, and resolve all your confusions right away.

Content: Movement in Demand Curve Vs Shift in Demand Curve

Comparison Chart
Definition
Key Differences
Figure
Video
Conclusion

Comparison Chart

Basis for Comparison	Movement in Demand Curve	Shift in Demand Curve
Meaning	Movement in the demand curve is when the commodity experience change in both the quantity demanded and price, causing the curve to move in a specific direction.	The shift in the demand curve is when, the price of the commodity remains constant, but there is a change in quantity demanded due to some other factors, causing the curve to shift to a particular side.
Curve
What is it?	Change along the curve.	Change in the position of the curve.
Determinant	Price	Non-price
Indicates	Change in Quantity Demanded	Change in Demand
Result	Demand Curve will move upward or downward.	Demand Curve will shift rightward or leftward.

Definition of Movement in Demand Curve

Movement along the demand curve depicts the change in both the factors i.e. the price and quantity demanded, from one point to another. Other things remain unchanged when there is a change in the quantity demanded due to the change in the price of the product or service, results in the movement of the demand curve. The movement along the curve can be in any of the two directions:

Upward Movement: Indicates contraction of demand, in essence, a fall in demand is observed due to price rise.
Downward Movement: It shows expansion in demand, i.e. demand for the product or service goes up because of the fall in prices.

Hence, more quantity of a good is demanded at low prices, while when the prices are high, the demand tends to decrease.

Definition of Shift in Demand Curve

A shift in the demand curve displays changes in demand at each possible price, owing to change in one or more non-price determinants such as the price of related goods, income, taste & preferences and expectations of the consumer. Whenever there is a shift in the demand curve, there is a shift in the equilibrium point also. The demand curve shifts in any of the two sides:

Rightward Shift: It represents an increase in demand, due to the favourable change in non-price variables, at the same price.
Leftward Shift: This is an indicator of a decrease in demand when the price remains constant but owing to unfavourable changes in determinants other than price.

The points given below are noteworthy so far as the difference between movement and shift in demand curve is concerned:

When the commodity experience change in both the quantity demanded and price, causing the curve to move in a specific direction, it is known as movement in demand curve. On the other hand, When, the price of the commodity remains constant but there is a change in quantity demanded due to some other factors, causing the curve to shift in a particular side, it is known as shift in demand curve.
Movement in demand curve, occurs along the curve, whereas, the shift in demand curve changes its position due to the change in the original demand relationship.
Movement along a demand curve takes place when the changes in quantity demanded are associated with the changes in the price of the commodity. On the contrary, a shift in demand curve occurs due to the changes in the determinants other than price i.e. things that determine buyer’s demand for a good rather than good’s price such as Income, Taste, Expectation, Population, Price of related goods, etc.
Movement along demand curve is an indicator of overall change in the quantity demanded. As against this, a shift in the demand curve represents a change in the demand for the commodity.
Movement of the demand curve can either be upward or downward, wherein the upward movement shows a contraction in demand, while downward movement shows expansion in demand. Unlike, shift in the demand curve, can either be rightward or leftward. A rightward shift in the demand curve shows an increase in the demand, whereas a leftward shift indicates a decrease in demand.

Video: Movement Vs Shift in Demand Curve

Figure

Movement in Demand Curve

Upward movement of the curve from A to C represents a contraction of demand due to the increase in the price of the commodity from P to P2. Downward movement of the curve from A to B denotes the expansion of demand due to the reduction in prices of the commodity from P to P1.

Shift in Demand Curve

Price remains unchanged, the rightward shift of the demand curve from D to D1 is termed as an increase in demand, as demand goes up from Q to Q1. The leftward shift of the demand curve from D to D2 is known as a decrease in demand, as demand goes down from Q to Q2.

Conclusion

Therefore, with the overall discussion, you might have understood, that a movement and shift in the demand curve are two different changes. Movement in the curve is caused by the variables present on the axis, i.e. price and quantity demanded. On the flip side, a shift in the curve is because of the factors which are other than those present on the axis, such as competitors price, taste, expectations and so on.