Civil Engineering Reference
In-Depth Information
Figure 4.2
Change in a non-price determinant causing a shift in
demand
If a non-price determinant of demand changes, we can show its effect by moving the
entire curve from D to D
1
. We assumed in our example that the move was prompted by
some research in favour of naturally ventilated buildings. Therefore, at each and every
price, a larger quantity would be demanded than before. For example, at price P the
quantity of naturally ventilated buildings demanded increases from Q to Q
1
.
P
D
1
D
0
Q
1
Q
Quantity of naturally ventilated buildings
demanded per year
By contrast, the price determinant causes a movement along the demand curve.
This is obvious when one remembers that the demand curve represents price and
quantity relationships. Changes to the quantity of demand due to price alone are
often referred to as an
extension
or
contraction
of demand. This involves a move
along the demand curve. When more is demanded at a lower price, this may be
regarded as an extension from one coordinate on the demand curve to another.
When less is demanded due to a rise in price, demand contracts. Such movements
along the demand curve are described further in
Figure 4.3
(see page 68).
Before we can begin to apply our theoretical knowledge of demand, it is
particularly important to remember the distinction between a movement along,
and a shift in, a demand curve. These rules will not only help us to understand the
graphical analysis, but they will also enable us to acknowledge the numerous factors
that come into play when interpreting demand in the construction industry.
