According to the Law of Demand, as price falls, quantity demanded rises and as price rises, quantity demanded falls. There exists an inverse relationship between price and quantity demanded. There is a difference between "demand" and "quantity demanded". Demand is shown on the demand curve by a total shift in the graph to either the left (decrease in demand) or the right (increase in demand). A Change in Demand occurs when the demand curve is effected by one of the determinants of demand.

These determinants are a change in consumer preferences or tastes, the number of buyers in the market, the incomes of the consumers (whether or not you will by a product if your income changes), the prices of related goods (complementary and substitute), and consumer expectations (what will happen in the future and how will it affect price and demand?).

A Change in Quantity Demanded is shown by moving on the demand curve from point to point. If only the price of the object changes and all other things remain equal, then this is a Change in Quantity Demanded, not a Change in Demand.
external image l3fig9.gif
This graph illustrates change in quantity demanded. The shift is along the curve; the demand curve itself doesn't move.

Question: There is a large increase in the price of margarine. How will this affect the demand curve of the butter industry? Is this a change in Demand or Quantity Demanded?

Answer: (Highlight the following) >>> The entire demand curve will shift to the right. Margarine is a substitute good in relation with butter, so an increase in the price of margarine will cause an increase in the demand for butter. This is a change in Demand. >>>