The phrase “demand has increased” means that
A there has been an upward movement along a demand curve.
B a demand curve has shifted to the left. a demand curve has shifted to the right.
C there has been a downward movement along a demand curve
The correct answer and explanation is :
The correct answer is B: a demand curve has shifted to the right.
Explanation:
In economics, demand refers to the quantity of a good or service that consumers are willing and able to purchase at different price levels, during a given period of time. The relationship between the price of a good and the quantity demanded is represented by the demand curve, which typically slopes downward from left to right. This slope reflects the inverse relationship between price and quantity demanded, known as the law of demand—when the price of a good falls, the quantity demanded generally increases, and vice versa.
When the phrase “demand has increased” is used, it refers to a situation where consumers are now willing to buy more of a product at every price level. This does not mean that there has been a simple price change, which would result in a movement along the demand curve. Rather, it indicates a shift in the entire demand curve.
A shift in the demand curve can happen for various reasons, such as:
- Changes in consumer preferences: If consumers begin to prefer a product more, they will demand more of it, leading to an increase in demand.
- Changes in income: An increase in consumers’ income often increases demand for normal goods, shifting the demand curve to the right.
- Changes in the prices of related goods: If the price of a substitute good rises, people may buy more of the product in question, causing an increase in demand. Alternatively, a fall in the price of complementary goods can increase demand for a product.
- Expectations of future price increases: If people expect prices to rise in the future, they may choose to buy more now, increasing current demand.
Therefore, when “demand has increased,” the entire demand curve shifts to the right, indicating that at every price level, consumers are willing to buy more of the product. This is different from a change in quantity demanded, which is caused by a price change and represented by a movement along the demand curve.
In conclusion, B is the correct answer because it properly reflects the shift in the demand curve caused by factors other than price, which results in an increase in demand at all price levels.