A movement along a curve happens when the product’s own price changes. A shift happens when anything else that affects buyers or sellers changes.
This lesson opens the demand and supply cluster. Every later lesson relies on getting this decision right.
What is the one question to ask?
Ask: “Did the price of this product itself change, or something else?” If the product’s own price changed, the answer is a movement. If something else changed, the answer is a shift.
Write the question at the top of your rough paper until it becomes automatic.
Worked example: iced lemon tea
A fictional stall has this demand schedule, showing the quantity buyers want at each price.
| Price per cup | Quantity demanded |
|---|---|
| RM2 | 100 cups |
| RM3 | 80 cups |
| RM4 | 60 cups |
A movement. The stall raises the price from RM2 to RM3. Buyers move along the same curve from 100 cups to 80 cups. The schedule itself is unchanged, so this is a fall in quantity demanded.
A shift. A hot spell arrives and the price stays at RM3. Buyers now want 100 cups at RM3, not 80. Demand has increased at every price, so the whole curve shifts right.
The price stayed at RM3 in the second case, yet the quantity changed. That is the sign of a shift: a different quantity at the same price.
Which cause sends me to which curve?
| Cause | Curve | Direction |
|---|---|---|
| Product’s own price falls | Demand | Movement down the curve |
| Buyers’ income rises (normal good) | Demand | Shift right |
| Tastes turn against the product | Demand | Shift left |
| Price of a substitute rises | Demand | Shift right |
| Cost of ingredients rises | Supply | Shift left |
| New technology lowers costs | Supply | Shift right |
A substitute is a product buyers may switch to. If the price of coffee rises, more buyers choose tea, so demand for tea shifts right.
The mistake: moving the curve for a price change
A typical wrong answer to “the price of iced lemon tea rises” draws a new demand curve further left and says “demand decreases”. The price rise is the stall’s own price, so the correct answer is a movement up the same curve.
| Wrong | Right | |
|---|---|---|
| Cause | Stall raises its own price | Stall raises its own price |
| Diagram | New curve drawn left | Point moves up the same curve |
| Wording | “Demand decreases” | “Quantity demanded decreases” |
The wording matters as much as the drawing. Use “quantity demanded” for movements and “demand” for shifts.
Check yourself
Decide whether each event is a movement or a shift for the demand for fried noodles at a fictional stall, and say why: (a) the stall cuts its price from RM6 to RM5, (b) a nearby factory opens and more workers come for lunch, (c) the price of rice rises and more people buy noodles instead.
Answer
(a) Movement, down the demand curve, because the product’s own price changed. Quantity demanded rises.
(b) Shift right, because the number of buyers increased. More is wanted at every price.
(c) Shift right. Rice is a substitute for noodles, so its price rise raises demand for noodles at every price.
What to study next
Put two curves together in drawing market equilibrium. To explore the moves yourself, use the supply-demand diagram reasoning explorer.
For a teacher to drill scenarios with you, see online one-to-one Economics tuition.