How is a decrease in the price of a good illustrated on a demand graph?

• A. As a shift of the demand curve to the right
• B. As a movement upward along the demand curve
• C. As a shift of the demand curve to the left
• D. As a movement downward along the demand curve

Answer: (D)

Verified step by step guidance

1. Understand the difference between a 'shift' of the demand curve and a 'movement along' the demand curve. A shift occurs when a non-price factor changes demand, while a movement along the curve happens due to a change in the good's own price.
2. Recall that the demand curve shows the relationship between the price of a good and the quantity demanded, holding other factors constant.
3. When the price of the good decreases, consumers are willing to buy more of the good, which is represented as a movement along the demand curve, not a shift.
4. Specifically, a decrease in price causes a movement downward along the demand curve because the price is on the vertical axis and quantity demanded is on the horizontal axis.
5. Therefore, on the demand graph, a decrease in price is illustrated as a movement downward (to the right) along the existing demand curve, not as a shift of the curve itself.