When consumers buy more of a good, the demand curve may not shift rightwards.

Introduction

The demand for a good is the quantity of the good that consumers are able and willing to buy at each price over a period of time, ceteris paribus. The law of demand states that there is an inverse relationship between price and quantity demanded. When the price of a good falls, the quantity demanded will rise. Conversely, when the price of a good rises, the quantity demanded will fall. The quantity of a good that consumers are able and willing to buy at each price can be shown by the demand curve. The demand curve shows the quantity demanded at each price and is downward sloping due to the law of demand.

Many students think that when consumers buy more of a good, the demand curve will shift rightwards. Mr. Edmund Quek will provide a more detailed explanation in the economics tuition class on this economic misconception.

Exposition

Consumers may buy more of a good due to a change in a non-price determinant of demand. In other words, quantity demanded may increase at the same price. This is called an increase in demand and is shown by a rightward shift in the demand curve. There are several non-price determinants of demand that may lead to an increase in the demand for a good. For example, a change in tastes and preferences towards a good will lead to an increase in the demand. A rise in the prices of substitutes for a good will induce consumers to buy less of the substitutes resulting in an increase in the demand for the good. A fall in the prices of complements for a good will induce consumers to buy more of the complements resulting in an increase in the demand for the good. Although the demand curve for a good may shift rightwards when consumers buy more of the good, this is not always the case. There are various factors which will induce consumers to increase the purchase of a good. Apart from a change in a non-price determinant of demand, consumers may also buy more of a good due to a fall in the price. This is called an increase in quantity demanded and is shown by a downward movement along the demand curve. In this case, the demand curve will not shift rightwards. Therefore, when consumers buy more of a good, whether the demand curve will shift rightwards will depend on the reason why consumers increase the purchase of the good.

Economics Tuition Singapore @ Economics Cafe
Principal Economics Tutor: Mr. Edmund Quek