To a layman, there may not be any difference between a change in quantity demanded and a change in demand.
However, to economists, change in demand is not the same as the change in quantity demanded.
Change In Quantity Demanded
When economists talk of change in quantity demanded, they mean extension or contraction in demand caused by a change in price while holding other factors constant.
Two cases of change in quantity demanded to exist, namely; Extension and contradiction in demand.
1. When as a result of a fall in price, the quantity demanded rises, it is called extension in demand.
2. When as a result of a price rise, the quantity demanded falls, it is called a contraction in demand.
It is important to note two things here:
First, price is the only factor that caused a change in the quantity demanded.
Secondly, a change in quantity demanded will result in movement along the same demand curve. This is illustrated below.
Change In Demand
When economists talk about the change in demand, they mean an increase or decrease in demand caused by non-price factors like income, price of related goods, etc.
Change in demand is usually represented as a shift in the demand curve.
Two cases of change in demand can be identified: increase in demand and decrease in demand
A. Increase in demand
Causes of increase in demand
1. Increase in the income of consumer assuming the good is normal: Normal goods are goods whose demand have a positive relationship with income.
This means that more will be demanded when income increases. Hence, a rightward shift of the demand curve.
2. Decrease in the income of consumers assuming the good is inferior: inferior goods are goods whose demand has a negative relationship with income.
What this means is that more will be demanded when income decreases. Hence, a rightward shift of the demand curve.
4. A fall in the price of complementary goods: Two goods are said to be complementary if they enhance the satisfaction a consumer gets from each other.
An example of complementary goods is a notebook and pen. If the price of pens falls, the demand for notebooks will increase.
Hence, the demand curve for notebooks shifts outward.
5. Favourable change in consumer taste: if, for example, consumers become aware of the health benefit of eating rice, then, the demand for rice will increase. This will be represented as a rightward shift of rice's demand curve.
6. Increase in population: An increase in population means that there are more people to buy a particular good. Hence, demand increases.
B. Decrease in demand
When as a result of a change in non-price factors, the demand curve shifts leftward/inward, then a decrease in demand is said to have occurred.
A decrease in demand means the consumer is willing to buy less of the commodity.
Causes of decrease in demand
1. Decrease in the income of consumer assuming the good is normal: Normal goods are goods whose demand has a positive relationship with income.
This means that less will be demanded when income decreases. Hence, a leftward shift of the demand curve.
2. Increase in the income of consumers assuming the good is inferior: inferior goods are goods whose demand has a negative relationship with income.
What this means is that less will be demanded when income increases.
Hence, a leftward shift of the demand curve.
3. A fall in the price of a good's substitute: Two goods are said to be substitutes if they can be used in place of each other.
Therefore, a fall in the price of a good's substitute means less of the good would be demanded.
Hence, the demand curve for that good would shift inward.
4. A rise in the price of complementary goods: Two goods are said to be complementary if they enhance the satisfaction a consumer gets from each other.
Going back to our earlier example of notebook and pen. If the price of pens rises, the demand for notebooks will decrease.
Hence, the demand curve for notebooks shifts inward.
5. Unfavourable change in consumer taste: one factor that can cause a change in consumer taste in fashion.
If a goods go out of fashion such that it causes an unfavourable change in consumers' tastes, then a decrease in demand will occur.
This will be represented as a leftward shift of rice's demand curve.
6. Decrease in population: An decrease in population means that there are fewer people to buy a particular good. Hence, demand decreases.
Difference between change in quantity demanded and change in demand
1. Change in quantity demanded is caused by price change whereas change in demand is caused by non-price factor change.
2. Change in quantity demanded result in extension and contraction in demand, while change in demand result in increase and decrease in demand.
3. Change in demand result in shift in demand whereas change in quantity demand result in movement along the same demand.
Voila! we just distinguish between a change in quantity demanded and a change in demand.
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