Microeconomics: Quantity Demanded, Price Elasticity, Income Elasticity, and Minimum Wage

MICROECONOMICS

Answer 1
Increase in quantity demanded refers to the change in the quantity demanded of a
service due to the decrease in the prices, while other factors remaining constant. Thus, the
increase in the quantity demanded when plotted on the graph leads to the movement along the
same demand curve (Mankiw, Kneebone & McKenzie, Kenneth 2017). The downward
demand on the demand curve explains the extension of the demand, as shown in the graph 1
below.
In contrast to this, the increase in the demand refers to the rise in demand for a
commodity by the virtue of factors other than price. The four key factors that can be
attributed to the increase in the demand are listed as follows. The increase in the income of
the consumers or the changes in the taste and preferences of the consumers can lead to the
increase in demand of a commodity (Hall & Lieberman, 2012). In addition to the above, the
rise in the prices of the substitute goods, or the fall in the prices of the complimentary goods
can lead to the increase in the demand of a product. The increase in the quantity demanded
can be represented on the graph as follows.