What Is the Difference Between a Shift in the Demand

question 50

Multiple Choice

What is the difference between a shift in the demand curve and a movement along the demand curve?

• A) A shift is a reaction to a movement along the demand curve.
• B) A shift implies a change in the whole demand curve; a movement does not.
• C) A shift conveys a change in the opportunity cost; a movement does not.
• D) A shift creates a new equilibrium price; a movement creates a new equilibrium quantity.

---

Definitions:

Binding Price Ceiling

A government-imposed price limit that is set below the equilibrium price, causing a shortage of the product because demand exceeds supply.

Binding Price Floor

A government-imposed price control or limit that sets the lowest price at which a good can be sold, which is above the market equilibrium price, leading to excess supply.

Persistent Surplus

A situation where the supply of a good consistently exceeds the demand for it, often leading to a drop in prices.

Quota Rent

The earnings that accrue to the licensee from the difference between the domestic price and the world price of an imported good when imports are limited by a quota.