What happens when the price of a good changes, holding all else constant?

What happens when the price of a good changes, holding all else constant?

• A. It only causes movement along the curve, not a shift
• B. It shifts the curve
• C. It shifts the other curve
• D. It causes no change at all

Answer: (A)

When only the price changes, quantity responds along the same curve because the curve represents the relationship between price and quantity with all other factors held fixed. A movement along the curve occurs as price rises or falls, changing how much buyers want to buy or how much sellers are willing to supply at that price. The curve itself doesn’t relocate unless something else changes, like income, tastes, prices of related goods, or expectations (for demand) or input costs, technology, or the number of sellers (for supply). So a price change with everything else constant shows up as a movement along the curve, not a shift of the curve.

When only the price changes, quantity responds along the same curve because the curve represents the relationship between price and quantity with all other factors held fixed. A movement along the curve occurs as price rises or falls, changing how much buyers want to buy or how much sellers are willing to supply at that price. The curve itself doesn’t relocate unless something else changes, like income, tastes, prices of related goods, or expectations (for demand) or input costs, technology, or the number of sellers (for supply). So a price change with everything else constant shows up as a movement along the curve, not a shift of the curve.