1) Distinguish between a shift of the demand curve for a product and a
movement along the product’s demand curve.
Demand is the quantity of a good or a service that a consumer desires
and able to afford it at a given time for a price. So it is the quantity of people who want and
are able to economically afford the product.
For example, the demand for expensive items like, Rolex watches is not
very high; because not many people are able to afford them therefore it has low
demand. The demand for items like, toilet paper, have an enormous demand
because everything needs it, and it is not very expensive.
Demand can be showed in a demand curve diagram, with price being on the
y-axis and quantity demanded on the x-axis. Demand curve can shift to the left,
meaning a drop in demand, or it can shift to the right, meaning a rise in
demand; also the change in price of a product causes a movement along the
existing demand curve.
With the graph it is easier to identify and understand how demand works.
It shows on the diagram the demand relationship. The lower the price, the
higher the demand will be.
Even thought there are many factors that may cause the demand curve to
shift, there only exists one that does not shift, which is a change in price,
this only causes a movement along the demand curve. Nevertheless as the price
changes the quantity demanded for the product will also change.
One effect that causes the movement along the curve is, The income
effect or ‘real income’ this is how much an individual can buy with their
certain income, so when the Price of a product decreases the individuals real
income will increase, making it more likely for that person to buy more of the
product.
Other effect is the substitution effect; this occurs when the price of a
product decreases it makes it more desirable in comparison to other, more
expensive ones. The consumers will buy more of the cheaper product, to replace
other, more expensive products, which have the same uses.
Nevertheless there are many factors that cause the demand curve to
shift, either to the left or to the right. Factors like, income, price and
quality of similar products, size of population, change of age structure,
change in income distribution, personal preferences, government policy changes,
seasonal changes and many others.
The demand curve can shift to the right, meaning that the product has
incremented its demand at every price.
If the demand curve shifts to the left it means that there is less
demand for the product.
The low states that it is compulsory to use a helmet while riding a bike
on the street, but change to this rule has been made.
As for now it is no longer compulsory to wear a helmet while riding a
bike unless the individual is underage.
Also the government enquires citizens to ride bikes, therefore it
subsidises bike companies making them cheaper to produce.
You might want to expand more on demand shifting to the left and also to the right and explaining them in more detail. Also you might want to beware of repeating yourself to much. You didn't give out full examples on how the demand would increase, you instead commented on how the bicycle helmets would decrease due to the law and also how less people will buy it if they're overage. And the helmet demand decreasing doesn't have anything to do with the demand of the bikes shifting to the right (increasing.) Which goes along with the graph that shows the demand going down. But the question was asking about the bicycles and how they would increase would would be factors that you put like "the government enquires citizens to ride bikes, therefore it subsidises bike companies making them cheaper to produce." which is a very good example but you could've expanded more on it, also if you're sure that the government would actually make it cheaper. I believe that question 2 should've been with a lot more detail like you did with question 1.
ReplyDeleteas ariana said, i think you need to expand and explain more shifting. i also think you should have included the law of demand to explain more your answer to number 1. your explanaition to the movement along the curve was breif but very good.
ReplyDeletefor the second question you should of explained the graphs, why its shifts and why it will move along the curve, i feel your answer was very short and had no explanation. i might take into consideration the fact that you did not understand the second question very well.