A Level Economics AQA Practice Exam

What occurs when the quantity demanded for a good falls due to a price increase?

1. Movement along the supply curve

2. Shift in demand curve

3. Movement up the demand curve

4. Increase in complementary goods

The correct answer is: Movement up the demand curve

When the quantity demanded for a good falls due to a price increase, this results in a movement up the demand curve. This concept is rooted in the law of demand, which states that there is an inverse relationship between the price of a good and the quantity demanded. As the price of a good increases, consumers typically purchase less of that good, leading to a decrease in quantity demanded at that higher price point. The movement up the demand curve is represented graphically where the price increase leads to a corresponding decrease in the quantity demanded along the same demand curve, rather than a shift of the curve itself. This situation highlights how price changes impact consumer behavior regarding quantity demanded without altering the overall demand for the product. Understanding this concept is crucial for analyzing market behaviors and dynamics effectively, as it emphasizes how price fluctuations can directly affect consumer purchasing patterns within the established demand framework.