Question

Explain the difference between change in demand and increase in demand. Use two factors
each as well as appropriate diagrams to support your explanations

Answer 1

Ans. Change in demand is the change due to non price factors. For example,

- Suppose we are considering the market for burgers and sandwiches are substitutes of bugers, so, increase in price of sandwiches will make people to shift their consumption from sandwiches to burgers increasing demand for burgers at each price level which shifts the demand curve for burgers to the right from D to D'.

- Suppose a survey reveals that those who eat burgers are likely to live less than average life expectancy. So, demand for burgers fall at each price level. This shifts the demand curve leftwards from D to D".

So, from the above two examples we can see that there is a change in demand but the increase in price of substitutes lead to an increase in demand. Thus, factors such as increase in income of consumers, decrease in price of complementary goods, increase in price of substitutes and favourable change in tastes and preferences of the consumers while change in demand means there can be either a decrease or increase in demand. So, change in demand is a broader term under which increase in demand comes.

Thank you

Price D' D D" Quantity