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My teacher keeps saying 'extension of demand' versus 'increase in demand' and I can't tell which one is a shift and which is just a movement.
A movement along the demand curve happens only when the price of the good itself changes, while all other factors stay constant. When price falls and quantity demanded rises, it is called extension of demand (a downward movement); when price rises and quantity falls, it is contraction of demand (an upward movement). A shift of the entire demand curve happens when a factor other than the good's own price changes, such as income, prices of related goods, tastes, or population. A rightward shift is called increase in demand (more is bought at the same price); a leftward shift is decrease in demand. So the simple rule is: a change in the good's own price causes a movement along the curve, whereas a change in any other determinant causes the whole curve to shift. Getting this distinction right is a common exam favourite.
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