If the price of a good changes, what is the effect on the demand curve?

• A. It causes a movement along the demand curve, changing the quantity demanded.
• B. It shifts the entire demand curve to the right.
• C. It has no effect on the demand curve or quantity demanded.
• D. It shifts the entire demand curve to the left.

Answer: (A)

Verified step by step guidance

1. Understand the difference between a movement along the demand curve and a shift of the demand curve. A movement along the demand curve happens when the price of the good changes, affecting the quantity demanded but not the demand itself.
2. Recall that the demand curve shows the relationship between the price of a good and the quantity demanded, holding all other factors constant (ceteris paribus).
3. Recognize that a change in the price of the good causes a change in quantity demanded, which is represented as a movement up or down along the same demand curve.
4. Know that shifts in the demand curve occur only when other factors change, such as consumer income, tastes, prices of related goods, or expectations, not the price of the good itself.
5. Therefore, when the price of the good changes, the correct interpretation is that there is a movement along the demand curve, changing the quantity demanded, rather than shifting the entire demand curve.