UNEMPLOYMENT PROBLEMS: The unemployment or resources, especially labor, is one of the more important macroeconomic issues facing economists and government leaders. The two key problems are: personal hardships and lost production. When resources don't produce goods, their owners don't earn income. The loss of income results in less consumption and a lower living standard. If fewer resources are engaged in production, fewer goods and services are produced. A decline in the income, consumption, and production associated with unemployment triggers further declines in income, consumption, and production. Members of society who might escape the direct, immediate personal hardships of unemployment can succumb to the indirect, multiplicative problems of lost production.
Visit the GLOSS*arama
CHANGE IN QUANTITY DEMANDED:
A movement along a given demand curve caused by a change in demand price. The only factor that can cause a change in quantity demanded is price. A related, but distinct, concept is a change in demand. A change in quantity demanded is a change in the specific quantity of a good that buyers are willing and able to buy. This change in quantity demanded is caused by a change in the demand price. It is illustrated by a movement along a given demand curve.
In fact, the only way to induce a change in quantity demanded is with a change in the price. Anything else, everything else, causes a change in demand.
As the demand price induces a change in the quantity demanded and a movement along the demand curve, the five demand determinants (buyers' income, buyers' preferences, other prices, buyers' expectations, and number of buyers) remain unchanged.
Demand and Quantity DemandedTo set the stage for an understanding of this difference, take note of two related concepts:
- Quantity Demanded: Quantity demand is a specific quantity that buyers are willing and able to buy at a specific demand price. It is but ONE point on a demand curve.
- Demand: Demand is the range of quantities that buyers are willing and able to buy at a range of demand prices. It is ALL points that make up a demand curve.
Making ChangesSo what happens when the phrase "change in" is placed in front of each term?
- Change in Quantity Demanded: A change in quantity demanded is a change from one price-quantity pair on an existing demand curve to a new price-quantity pair on the SAME demand curve. In other words, this is a movement along the demand curve. A change in quantity demanded is caused by a change in price.
- Change in Demand: A change in demand is a change in the ENTIRE demand relation. This means changing, moving, and shifting the entire demand curve. The entire set of prices and quantities is changing. In other words, this is a shift of the demand curve. A change in demand is caused by a change in the five demand determinants.
Changing the Quantity
A change in quantity demanded is a movement along a given demand curve. A change in demand is a shift of the demand curve. These alternatives can be illustrated with the negatively-sloped demand curve presented in this exhibit. This demand curve captures the specific one-to-one, law of demand relation between demand price and quantity demanded. The five demand determinants are assumed to remain constant with the construction of this demand curve.
|A Change in Quantity Demanded
: A change in demand, which is triggered by a change in any of the five demand determinants, is a shift of the demand curve. Click the [A Determinant Change] button to demonstrate.
- A Change in Quantity Demanded: A change in quantity demanded, which is only triggered by a change in demand price, is a movement along the demand curve. Click the [A Price Change] button to demonstrate.
A Change in Demand
An Important DifferenceWhy is this difference so important? The answer is as simple as cause and effect. The demand curve is used (together with supply) to explain and analyze market exchanges. The sequence of events follows a particular pattern.
- First, a demand (or supply) determinant changes.
- Second, this determinant change causes the demand curve (or supply curve) to shift.
- Third, the change in demand (or supply) causes either a shortage or a surplus imbalance in the market. The market is in a temporary state of disequilibrium.
- Fourth, the shortage and surplus imbalance causes the price of the good to change.
- Fifth, the change in price causes a change in quantity demanded (and supplied).
- Sixth, the change in quantity demanded (and supplied) eliminates the shortage or surplus and restores market equilibrium.
The key conclusion is that demand (and supply) determinants, which induce changes in demand (and supply), are the source of instability in the market. The change in price, which induces a change in quantity demanded (and supplied) is the means of eliminating the instability and restoring equilibrium.
CHANGE IN QUANTITY DEMANDED, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2024. [Accessed: February 28, 2024].
Check Out These Related Terms...
| | | |
Or For A Little Background...
| | | | | | | | | |
And For Further Study...
| | | | | | | | | |
Back to the WEB*pedia
Today, you are likely to spend a great deal of time flipping through mail order catalogs trying to buy either a pair of red goulashes with shiny buckles or a handcrafted bird feeder. Be on the lookout for telephone calls from long-lost relatives.
Your Complete Scope
This isn't me! What am I?
Approximately three-fourths of the U.S. paper currency in circular contains traces of cocaine.
"Always make a total effort, even when the odds are against you."
-- Arnold Palmer
Moment Generating Function
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.