Question

During the Christmas holiday season, the price of Christmas trees increases and the quantity demanded for trees also increases. Does it reflect change in quantity demanded or change in demand? Support your answer with the use of a diagram. Label your diagram with appropriate variables on X axis and Y axis.

Answer 1

During the holiday season, the prices of Christmas trees increases this causes a movement in the quantity demanded curve from point A to point B. This observation is validated by the Law of Demand where whenever price of good rises the quantity demanded of the good declines keeping other factor constant.

In case of change in the demand, the demand curve shift in the right or left side due to changes in the other factors such as price of complementary goods, price of substitute goods, number of buyers, income of the buyers and the price expectation in the future.

Price 2 duantity Quantity change in demand landed