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How Price Changes Affect Demand
Price is a primary contributor the effective demand of a good. If the price of a good is reduced we would expect a movement along the demand curve. This is known as a change in quantity demanded or an extension in demand, resulting in an increase in quantity demanded.
Conversely an upward increase in the price of a good would cause a movement upward along the demand curve. This is a contraction in demand resulting in a decrease in quantity demanded.
Only price can cause an extension or contraction in quantity demanded, whilst other factors can cause the demand curve to shift. A rightward shift is positive and would lead to a higher level of demand without the price of the product changing. This could be due to an increase in advertising. 
A leftward shift is negative and would lead to a lower level of demand without the price of the product changing. This could be due to a reduction in income.




 
Page last updated on 20/10/13

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