Refer to Figure 3-1. Using the graph above and beginning on demand curve D1, a shift to demand curve D2 would indicate a(n):

• A. increase in demand
• B. decrease in quantity demanded
• C. increase in quantity demanded
• D. decrease in demand

Answer: (A)

Verified step by step guidance

1. Understand the difference between a 'change in demand' and a 'change in quantity demanded'. A change in demand means the entire demand curve shifts, while a change in quantity demanded means movement along the same demand curve due to a price change.
2. Identify that moving from demand curve D1 to demand curve D2 represents a shift of the entire demand curve, not just a movement along the curve.
3. Recall that a shift to the right (from D1 to D2) indicates that at every price, consumers are willing to buy more, which is called an increase in demand.
4. Contrast this with a movement along the demand curve, which would be labeled as an increase or decrease in quantity demanded depending on price changes.
5. Conclude that the shift from D1 to D2 is an increase in demand because the demand curve shifts outward, reflecting higher quantity demanded at each price.