Video: Changes in Demand and Supply

In this lesson, Nick Palazzolo, CPA, delves into the nuances between a change in quantity demanded versus a change in demand, as well as similar distinctions in supply. He uses concise explanations to illuminate the difference between movements along the curves and shifts of the curves themselves, driven by changes in price, quantity, or external factors. Nick reinforces the conceptual framework with practical tips, such as the 'finger technique', to help visualize and remember these economic principles, making it clear how each type of change impacts equilibrium points—an essential understanding for making sense of multiple-choice questions.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Okay. Change in quantity demanded versus change in demand. Let's see what we have. Well, a change in quantity demanded is actually a change on the X axis, whereas a change in demand overall actually shifts the entire curve. So just make sure you're aware and you're reading carefully.

I just want to bring that to your attention as well. If it says a change in price or a change in quantity, think about what it is. Because again, a change in demand as a whole or supply as a whole is a shift in the whole curve, whereas a change in the price or the quantity is going to be just a shift based on either the X or Y axis. So a change in price would cause a movement along the demand curve. Alright, where's our equilibrium point?

Right, we're going to shift here. A change in demand overall from external influences would cause a movement along the demand curve. An increase in demand, as we've covered in previous lessons, is a rightward shift. A decrease in demand is a leftward shift. If the price increases or decreases, this will affect demand for sure, and quantity demanded will affect demand as well, and that will shift the curve.

But understanding where the causality is coming from, where is the push coming from? Is it from one of the points or is it from the curve overall?

Well, we covered demand and yeah, that was something that we covered with supply as well. You can't have one without the other, right? Now, a change in price would cause a movement along the supply curve, whereas a change in supply from external influences would cause an actual movement along the supply curve. Make sure you are memorizing that the supply curve is the one

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