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Difficulty: MediumConcept and Law of Demand

When the unit price of bread in a local market drops from ₦800 to ₦600 while all non-price factors remain constant, a household increases its weekly consumption of bread from 3 loaves to 5 loaves. How is this change in purchasing behavior correctly categorized in economic analysis?

  1. An increase in quantity demanded, represented by a downward movement along the existing demand curveAnswer
  2. B
    An increase in demand, represented by a rightward shift of the entire demand curve
  3. C
    An expansion in competitive demand, represented by a shift of the demand curve to the left
  4. D
    A decrease in quantity demanded, represented by an upward movement along the existing demand curve

Answer

An increase in quantity demanded, represented by a downward movement along the existing demand curve
According to the Law of Demand, when the price of a good falls while non-price factors remain constant (ceteris paribus), consumers purchase more of that good. Because this adjustment is driven strictly by the price of the commodity itself, it represents a change in quantity demanded, shown graphically as a downward movement along the existing demand curve.

Step-by-Step Solution

1
Identify the primary cause of the change in purchasing behavior.
The change is triggered solely by a reduction in the price of bread itself (from ₦800 to ₦600), under ceteris paribus conditions.
The Law of Demand states that price changes of the commodity itself govern movements in quantity demanded.
2
Differentiate between a change in quantity demanded and a change in demand.
A change in a commodity's own price causes a movement along its existing demand curve (a change in quantity demanded), not a shift of the curve.
Shifts in the demand curve (changes in demand) occur only when non-price determinants like consumer income, tastes, or prices of related goods change.
3
Determine the direction of movement along the demand curve.
A drop in price leads to an increase in quantity demanded, which corresponds to a movement downwards along the demand curve.
Demand curves slope downward from left to right due to the inverse relationship between price and quantity demanded.

Key Concept

Distinction between Change in Quantity Demanded and Change in Demand
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Topics

Concept and Law of Demand

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