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CMA Foundation · Fundamentals of Business Economics and Management · Theory of Demand and Supply

Which of the following statements correctly distinguishes between a change in quantity demanded and a change in demand?

A change in quantity demanded arises from a change in the good's own price and appears as movement along the same demand curve. A change in demand arises from other determinants such as income, tastes or related-good prices and appears as a shift of the whole curve.

  1. ABoth are caused only by a change in the price of the commodity
  2. BA change in quantity demanded results from a change in the commodity's own price, while a change in demand results from changes in other determinants such as income, tastes or prices of related goodsCorrect
  3. CA change in demand is shown by movement along a curve, while a change in quantity demanded is shown by a shift of the curve
  4. DA change in quantity demanded is caused by changes in income, while a change in demand is caused by a change in own price

Explanation

Own price changes move us along a given demand curve, giving expansion or contraction of quantity demanded. Changes in income, tastes, related-good prices or expectations shift the entire curve, giving an increase or decrease in demand. The other options reverse or merge these causes.

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