Constructing and Shifting Demand and Supply Curves
How demand and supply are drawn as curves, and the key difference between a movement along a curve caused by price and a shift of the whole curve caused by other factors.
Use it, the way the marks are given
Free interactive practice at using the material, which is what the marks are for.
Start revising freeWhat you'll cover
Demand and supply
Prices in a market are set by demand and supply. Demand is how much buyers want to buy at each price, and supply is how much producers offer to sell. Each can be shown as a curve on a diagram. It is vital to tell the difference between a movement along a curve, caused by the price of the good, and a shift of the whole curve, caused by other factors.
Words for the market
Learn these four terms before you read the curves.
Movement and shift
A curve can respond in two very different ways.
Move along, or shift?
To reach the top grades, be precise: only a change in the price of the good moves you along the curve. Every other factor shifts the whole curve to the left or right.
Read the term from the figures
- demand
- supply
- movement along a curve
- a shift of a curve
- at 6 pounds shoppers would buy 300 pairs of sunglasses a week, at 10 pounds only 180
- at 6 pounds the stall would put out 180 pairs a week, at 10 pounds it would put out 300
- the stall raises its price from 6 pounds to 10 pounds and reads off the new quantity
- the whole schedule is rewritten, so that 400 pairs now sell at the old price of 6 pounds
Match the cause to its effect
- a rise in consumer income
- a good becomes fashionable
- a fall in production costs
- a new tax on a good
- raises demand for a normal good
- raises demand as tastes change
- raises supply
- lowers supply
Which way does demand slope?
Which way does a demand curve slope?
- Downwards, because higher prices reduce quantity demanded.
- Upwards, because higher prices raise quantity demanded.
- It is always flat.
- Vertical, because demand never changes with price.
What shifts demand?
Select the TWO factors that SHIFT the demand curve.
- A change in consumer income.
- A change in fashion or tastes.
- A change in the price of the good itself.
- The colour of the graph.
Order the shift
Put the steps in order to show how a rise in income shifts demand.
- Consumer incomes rise
- Demand for a normal good increases
- The demand curve shifts to the right
- At each price, more is now bought
Trace the two changes
A shop sells 40 pairs of headphones a week at 25 pounds. It raises the price to 35 pounds and sells only 24, which is a _____ along the curve, because the _____ of the good is what changed. Back at 25 pounds, a good review then lifts weekly sales to 65. The price is the same as before, so this cannot be a movement: it has to be a _____ of the entire curve to the _____, because at every price more is now _____.
Count the curves
A demand and supply diagram is drawn with how many curves, one for demand and one for supply?
Demand and supply curves
Tap the TWO statements that are TRUE.
- The demand curve slopes downwards
- A non-price factor shifts the whole curve
- The supply curve slopes downwards
- A change in the price of the good shifts the curve
- Demand and supply are the same thing
Movement or shift?
Decide whether each change is a movement along the curve or a shift of the curve.
- The price of a good rises and less of it is bought
- Consumer incomes rise and more is bought at every price
- The graph is printed in a different colour
Explain movement and shift
Explain the difference between a movement along a demand curve and a shift of the demand curve. Give the cause of each, and an example of each.
- Explain what causes a movement along the curve
- Explain what causes a shift of the curve
- Give an example of each