What Is the Movement Along the Demand Curve?

Supply and Demand

Supply and demand refer to the concept that the supply of a product is closely linked to the demand for a product. As supply of a product increases, the price of the product often goes down. This often causes the demand for the product to rise, sending the price back up. This happens until supply and demand reach an equilibrium and the product has found its "true" price.

Demand Curve

The demand curve is a graphical expression of the relationship of demand to the price of a product. Generally, although not always, the cheaper a product, the more people will buy it. As the product gets more expensive, the curve representing demand begins to trend downward, as fewer people buy the product, before eventually leveling off as the product becomes too expensive for anyone to buy.

Movement Along The Demand Curve

The term "movement along the demand curve" refers to a change in demand for a particular product based on a change in the price of a product. If the price of the product were to rise, then the demand curve could be said to be moving in a downward direction, while if the price of the product were to fall, then the demand could be said to be moving in an upward direction.

Example

If an umbrella is sold at $5, it might have 100 buyers. However, if the producer were to shift the price to $6, then the umbrella might have only 90 buyers. By contrast, if the producer were to drop the price to $4, then the umbrella might have 150 buyers. These changes in demand all represent shifts on the demand curve.