Suppose the accompanying graph illustrates the market for cigarettes. If the price of cigarettes increases, what movement will occur along the demand curve?

• A. There will be a movement downward and to the right along the demand curve, indicating an increase in quantity demanded.
• B. The entire demand curve will shift to the left.
• C. There will be a movement upward and to the left along the demand curve, indicating a decrease in quantity demanded.
• D. The entire demand curve will shift to the right.

Answer: (C)

Verified step by step guidance

1. Understand that a demand curve shows the relationship between the price of a good and the quantity demanded, holding all else constant.
2. Recognize that a movement along the demand curve occurs when there is a change in the price of the good itself, leading to a change in quantity demanded.
3. Recall that when the price of a good increases, the quantity demanded typically decreases, causing a movement upward (higher price) and to the left (lower quantity) along the demand curve.
4. Distinguish this from a shift of the demand curve, which happens when factors other than the price (like income, preferences, or prices of related goods) change, causing the entire curve to move left or right.
5. Conclude that an increase in the price of cigarettes results in a movement upward and to the left along the demand curve, indicating a decrease in quantity demanded.