♪ [music] ♪ - [Narrator] Economists use similar terms for two things which are quite different: a change in the quantity demanded versus a change in demand. It can be a little confusing, so let's review. A change in quantity demanded refers to a movement along a fixed demand curve -- that's caused by a change in price.
A change in demand refers to a shift in the demand curve -- that's caused by one of the shifters: income, preferences, changes in the price of related goods and so on. Let's illustrate the difference with a refreshing example. We'll use soda.
- [Woman 1] Um, don't you mean pop? - [Man] That's a coke, y'all! - [Woman 2] Actually, soft drink is the most accurate term, so.
. . - [Narrator] Fine, we'll just use sugary, fizzy drinks, okay?
First, let's recall a change in the quantity demanded. Suppose the price on sugary, fizzy drinks goes from $3 to $4. What happens?
Well, the quantity demanded decreases from 200 to 150. There's a decrease in the quantity demanded marked by movement along the demand curve. But there's no change in the existing demand curve.
Now, let's look at a change in the demand, in this case, a decrease in demand of [sighs] sugary, fizzy drinks, caused by a viral marketing campaign for naturally sweetened sparkling water. People just aren't as excited about sugary, fizzy drinks anymore. The decrease in demand shifts the entire demand curve down and to the left and leads, as we know, to a lower quantity at every price.
In the first case, on the left, we have a decrease in the quantity demanded -- that is a movement along a fixed demand curve. In the case on the right, we have a decrease in demand. The entire demand curve shifts down and to the left.
An easy way to remember this is that our graph tracks changes in price and quantity. If a change occurs in a variable other than price or quantity -- that is, something not measured on either axis -- that will represent a shift in the demand curve. Prices on the vertical, or y-axis, so a change in price alone, will cause movement along the curve.
A change in income, population, tastes, etc. -- none of these are measured on either axis, and thus, we'll see a shift in the entire demand curve. So there you have it.
Similar terminology can be confusing, but if you follow the curves, you won't have to worry. If you're a teacher, you should check out our Supply and Demand unit plan that incorporates this video. If you're a learner, make sure this video sticks by answering a few quick practice questions.
Or if you're ready for more microeconomics, click for the next video.
