It’s hard to overstate the importance of understanding the difference between shifts in curves and movements along curves. Remember, when we talk about changes in demand or supply, we do not mean the same thing as changes in quantity demanded or quantity supplied.
A change in demand refers to a shift in the entire demand curve, which is caused by a variety of factors (preferences, income, prices of substitutes and complements, expectations, population, etc.). In this case, the entire demand curve moves left or right.
Figure 1. Change in Demand. A change in demand means that the entire demand curve shifts either left or right. The initial demand curve D0 shifts to become either D1 or D2. This could be caused by a shift in tastes, changes in population, changes in income, prices of substitute or complement goods, or changes future expectations.
A change in quantity demanded refers to a movement along the demand curve, which is caused only by a chance in price. In this case, the demand curve doesn’t move; rather, we move along the existing demand curve.
Figure 2. Change in Quantity Demanded. A change in the quantity demanded refers to movement along the existing demand curve, D0. This is a change in price, which is caused by a shift in the supply curve.
Have you ever observed why the inessential things like diamonds, platinum, gold are very expensive, whereas necessities like food, clothes, water are inexpensive? The only answer to this question is the law of demand, which determines how consumer demand is affected by different factors like price, income, substitute or complementary goods, tastes & preferences and so forth.
Many people often juxtapose the terms demand and quantity demanded in this context. So, let’s take a look at this article in which we’ve simplified the differences.
Content: Demand Vs Quantity Demanded
- Comparison Chart
- Definition
- Key Differences
- Conclusion
Comparison Chart
Meaning | Demand is defined as the willingness of buyer and his affordability to pay the price for the economic good or service. | Quantity Demanded represents exact quantity (how much) of a good or service is demanded by consumers at a particular price. |
What is it? | It lists out quantities that would be purchased at various prices. | It is the actual amount of goods desired at a certain price. |
Change | Increase or decrease in demand | Expansion or contraction in demand. |
Reasons | Factors other than price | Price |
Measurement of change | Shift in demand curve | Movement along demand curve |
Consequences of change in actual price | No change in demand. | Change in quantity demanded. |
Definition of Demand
Demand is defined as the amount of product or service that a consumer or a group of consumers are willing and able to buy at different prices, at a given period. A simple desire to purchase a commodity does not constitute demand as it is not effective, however, ‘desire’ is the major component of it. Effective demand is a combination of three elements, desire, means to purchase and willingness to utilize those means for buying. A demand is not considered as demand if it is not supported by the ability to pay the price of the product.
Therefore demand can be explained at different quantities of a product or service, which could be purchased at various prices/income/price of related goods at a given period. The figure given below represents the shift in demand curve due to various factors such as income, taste or preferences, the price of complementary or substitute goods etc. The rightward shift represents an increase in demand and the leftward shift is an indicator of the decrease in demand.
Definition of Quantity Demanded
Quantity Demanded refers to how much of an economic good or service is demanded by a consumer or a group of consumers at a given period at a certain price. There are two important points related to quantity demanded which are,
- It is always expressed at a given price, in essence, different quantities are demanded at different prices.
- It is a flow which means quantity demanded doesn’t indicate a single purchase rather a continuous flow of purchases.
The given below figure represents the movement along demand curve due to changes in price, i.e. the upward movement of demand curve indicates the contraction of demand whereas a downward shift denotes the expansion of demand.
The following points are noteworthy so far as the difference between demand and quantity demanded is concerned:
- Demand is defined as the willingness of buyer and his affordability to pay the price for the economic good or service. Quantity Demanded represents an exact quantity (how much) of a good or service is demanded by consumers at a particular price.
- Demand refers to the graphing of all the quantities that can be purchased at different prices. On the contrary, quantity demanded, is the actual amount of goods desired at a certain price.
- When a person talks about increase or decrease in demand, it means the change in demand. Conversely, if a person talks about expansion or contraction of demand, he refers to the change in quantity demanded.
- Changes in demand are due to the factors other than price, i.e. income, the price of complementary goods, the price of substitutes, etc. On the other hand, changes in quantity demanded is due to price.
- Change in demand will result in the shift in the demand curve. As opposed to quantity demanded, where the change may lead to the movement along the demand curve.
Conclusion
Demand is inversely related to price, i.e. with the increase in price, the demand for the product or service decreases whereas a decline in the price of the product or service may cause a rise in its demand. Further, it can be represented by a curve that shows the relationship between price and quantity demanded. On the other hand, quantity demanded is a particular point on the demand curve.