Movement Along The Demand Curve Flashcards, test questions and answers

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What is Movement Along The Demand Curve?

The demand curve is an economic concept used to illustrate the relationship between price and quantity demanded for a particular good or service. It illustrates how, as the price of a product increases, consumers will be willing to purchase fewer units of it; that is, their demand for the product decreases. Conversely, if the price of a product decreases, then more units will be purchased; in other words, people become more likely to buy it. The movement along the demand curve describes this change in consumer behavior when prices fluctuate.When there is movement along the demand curve due to changes in price, there are several things that can happen. First and foremost, total quantity demanded may increase or decrease depending on whether prices have increased or decreased respectively. If prices rise too much above equilibrium levels (the point where supply and demand are equal), then less units will be purchased altogether because few people will want to overpay for something they could get cheaper elsewhere. On the other hand, if prices fall below equilibrium levels then more units may be bought because buyers perceive them as being undervalued at these lower rates even though they would still not pay any more than what they normally would at normal market conditions. Furthermore, changes in consumption patterns can also occur with shifts along the demand curve: some consumers might switch from buying one type of good/service to another that has become relatively cheaper compared before due to price changes; likewise those who weren’t buying anything previously might now decide it’s worth purchasing because its relative cost has gone down significantly since last time they checked out its pricing structure (in other words it’s become much cheaper than before). Also known as substitution effects these types of movements can help explain why markets don’t always remain static despite constant fluctuations in pricing structures across different goods/services available within them – revealing interesting insight into how changing incentives drive our decisions when making purchases even if we don’t realize it consciously.