Thursday, February 16, 2012

Does the following situation reflect a movement along a demand curve or a shift in the demand curve?The situation is that movie theaters charge a...

The situation described in the question is an example of shift in demand curve.


A demand curve is a graph of quantity of a good demanded by consumers at different prices, assuming all others things being constant. When under such static condition, the supplier change the prices they ask for the good they sell, the quantity demanded by the consumers at various price is represented by the demand curve, and change in demand due to change in price is the movement of demand along a (the same) demand curve.


In contrast, when other market conditions assumed to be constant for a demand curve change, the price for the goods demanded it self changes. The example in the question represents such a situation. Generally, there are more people wanting to see movies in theaters on weekends as compared to weekdays. Because people find it more convenient and enjoyable to watch movies in theatre on weekdays, they are also willing to pay higher prices for eat. Thus the demand curve for price of admission to movie theaters on week days will be different. At each price level the demand on weekend will be higher than that on weekdays. Thus the while demand curve for weekends will shift to right as compared to demand curve for weekdays.

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