Civil Engineering Reference
In-Depth Information
Figure 4.3
Change in price causing a movement along a given
demand curve
We show the demand curve for a hypothetical good X. If the price is P
1
, then the
quantity demanded would be Q
1
; we will be at coordinate A. If the price falls to P
2
,
and all other factors in this market remain constant, then there will be an extension of
demand to Q
2
- from coordinate A to coordinate B
P
1
A
B
P
2
Demand curve
Q
1
Q
2
Quantity of x demanded/year
Key Points 4.2
❍
Four major non-price determinants are (a) income, (b) price of other goods,
(c) expectations and (d) government policy.
❍
If any of the non-price determinants changes, the demand schedule shifts
to the right or left and we refer to an increase or decrease of demand
(see
Figure 4.2
).
❍
Movements along a given demand curve are caused by price changes and
these are described as contractions or extensions of demand (see
Figure 4.3
).
