- [Instructor] What we're
going to do in this video
is a deep dive into the
difference between demand
and quantity demanded.
In particular, we're gonna
focus on change in demand
versus change in quantity demanded.
And so just as context, I
have price versus quantity
here for brand X of
cars in a certain market
and you see the demand
curve for brand X of cars
and we see the it follows
the classic law of demand.
At a high price, there is
a low quantity demanded,
and so this is already trying
to draw the distinction.
A quantity demanded,
so I'll call this qd1,
is associated with a particular
point on the demand curve,
it's not the whole curve itself.
When people talk about demand,
they're talking about the whole curve.
But just following on of what I just said,
following the law of
demand at a low price,
this is associated with, if
we go to the demand curve,
a high quantity demanded,
quantity demanded two.
And so to be very particular about this,
quantity demanded is associated
with a particular point
on the demand curve while
the demand curve is the set
of all of these points that
show how price and quantity
are associated.
So with that out of the way,
to make things more tangible,
let's go through a bunch
of different circumstances
and think about whether they would result
in a change in demand versus
a change in quantity demanded.
So in this first scenario
we say car dealerships
slash prices by 10%.
Would that result in a change in demand,
which would involve
shifting our demand curve,
or would it involve a
shift along the curve,
a change in quantity demanded?
Pause the video and try to figure it out.
Well, there's a couple of
ways to think about it.
In order to shift the demand curve itself
the one way I think about
it is if you were to pick
a given price, if you were
to pick a given price,
does what's described here
in any way shift the quantity
that would demanded at that price?
Well, no, this is not
shifting how much consumers
would want to buy at that price.
This is just shifting the price itself.
So this is going to be a
shift along the demand curve.
So this would be a scenario where maybe
the equilibrium price, and
we'll talk more about that
in future videos, maybe
the equilibrium price
and quantity demanded are
associated with that point
right over here before car
dealers slashed their prices.
So let's call this quantity demanded,
let's call that quantity demanded three.
But then when they slashed their prices,
the prices go down, and so
we end up with this point
on our demand curve, and so
this would be quantity demanded,
quantity demanded four.
So this would be a change
in quantity demanded right over here,
so change, I'll do delta for change in,
change in quantity demanded.
And in this case, the
quantity demanded would go up.
What about the price
of gasoline increases?
Pause this video.
Think about what would happen.
Would that change the
quantity demanded for the cars
or would it shift the entire demand curve?
Well, I'll do the same exercise.
Pick a given price.
Let's say we're at this
price right over here
and this is the current quantity demanded,
now if all of a sudden, actually
for any price that I pick,
if the price of gasoline increases,
consumers will just have
less money in their pocket,
the cost of maintaining and
using a car at any price
would go up, and so they
might be willing to buy
less cars because the
operating cost has gone up.
And this would be true at
any price, at any price.
And so one way to think about it is
the entire demand curve, the
way I've just phrased it,
you could view for the entire
demand curve would shift.
So if we call this D1
here, now this would be D2.
So here we would say change in demand,
and in this case, our change in demand,
it would shift, it would go down.
You could view it as shifting to the left.
Actually, let me write that
as shifting to the left
because that's what it
looks like on this graph.
Let's do this third example,
prices of public transportation goes down,
what would happen?
Is this a change in quantity demanded
or would it be a shift
in the demand curve?
Well, once again, for
any, for any given price
that we are talking about,
whether we're talking about here
or whether we're talking about here,
the substitute or one of the substitutes,
which is public transportation,
is now looking more favorable.
So you could imagine
people at a given price
will just not demand, the
market will just not demand
as much of a quantity.
And so this, once again,
would be a change in the demand curve.
When something is true for any given price
along the curve, then you
know that you're going to be
shifting the curve.
So our change in demand, and once again,
we're going to shift to the left,
so it's similar to bullet point two.
Now, let's see, here
we say the state lowers
vehicle registration fees.
Pause the video and think about that.
Well, once again, regardless
of where we might be sitting
along the demand curve
now, if registration fees
has gone down, now the
total cost of ownership
of a car has gone down,
and so for any given price,
people might be able to
demand a little bit more car.
And so here we would have
a shift of the demand curve
to the right.
Shift of the demand curve to the right.
We could call this D3 right over here.
So we have a change in
the entire demand curve,
not just quantity demanded,
and we are going to the right.
Let's do this, what is
this, the fifth example.
A recession leads to
falling household incomes.
Pause this video and think about it.
Well, falling household
incomes is actually
analogous in some ways to the
price of gasoline increases
because people are just
going to have less incomes
regardless of what point
we are on the curve.
People are just going
to be able to buy less.
So that's going to shift the demand curve,
the entire demand curve to the left.
So it's a shift in demand
or a change in demand
once again going to the left.
Last but not least, consumers
expect new car prices
to rise next year.
What is that going to do to either,
is that going to be a
change in demand or a change
in quantity demanded?
Pause the video and think about it.
Well, once again, this
is something that applies
regardless of where we happen to sit
at a given moment on the curve,
whatever the equilibrium price is,
and we'll talk more about
that in other videos.
This is generally going
to apply to any point
that we are on the curve.
If people expect prices to increase,
if all of a sudden there's
a bulletin that says,
Hey, car prices are going
to double next year,
well then you can imagine
wherever we are on the curve,
people are going to say, Oh, if car prices
are going to double next year,
I better buy more car right now,
so our entire demand
curve is going to shift
to the right, so it's a change
in the entire demand curve,
and it is going to go to the right.
So the big picture here,
if we're talking about
a change in, well you could say a change
in a particular price,
someone raises the price
or lowers the price, well
that's going to change
the quantity demanded.
And later when we draw the supply curve
and we see where they
intersect and you have
an equilibrium price, when one
or both of the curves shift,
their intersecting point
changes and so then you will,
you could have a shift in the curves,
which will then result in a
change in the quantity demanded.
But if we're talking about
things that are generally
true regardless of where
we are on the curve,
that will just affect
people's general demand
for something, that is going
to shift the entire curve,
it's going to be a change in demand
versus a change in quantity demanded.
