Question

What is the difference between a movement factor and a shift factor?

Short answer

Movement factors cause movements along the demand or supply curve due to price changes of the product itself. On the other hand, shift factors cause the entire demand or supply curve to shift due to changes in factors other than the product’s own price.

Step-by-step solution

Define Movement Factor

A movement factor is an economic term that refers to a change in the quantity demanded or supplied that is due to a change in the product's price. In a supply-demand graph, this translates to a movement along the curve.

Define Shift Factor

A shift factor relates to the things that cause the supply or demand curve to shift to a new position. This shift can occur due to multiple factors including changes in income, taste and preferences or prices of related goods for demand, and changes in production cost, technology, or expectations of future prices for supply.

Pinpoint the Difference

The key difference between a movement factor and a shift factor lies in what causes the change. Movement factors refer to changes in the amount exchanged due to the good's price changes, resulting in movements along the demand or supply curve. In contrast, shift factors refer to changes not caused by the good's own price but by other determinants. These cause the entire demand or supply curve to move to a new position.