Multiple Choice
Which statement best explains how a change in consumer tastes affects the demand for a good, holding price and other factors constant?
3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
Multiple Choice
What factors can cause a shift in the demand curve for smartphones?
A
A change in the price of smartphones, holding other factors constant
B
Changes in production costs, technology, number of firms, and taxes on producers
C
Changes in consumer incomes, tastes and preferences, prices of substitutes and complements, population/demographics, and expectations about future prices
D
Government subsidies to producers, input prices, and technological advances in production
Verified step by step guidance1
Understand that a demand curve shows the relationship between the price of a good and the quantity demanded, holding other factors constant (ceteris paribus).
Recognize that a change in the price of the good itself causes a movement along the demand curve, not a shift of the curve.
Identify factors that cause the entire demand curve to shift, which include changes in consumer incomes, tastes and preferences, prices of related goods (substitutes and complements), population or demographics, and expectations about future prices.
Distinguish these demand-shifting factors from supply-side factors such as production costs, technology, number of firms, taxes, and subsidies, which affect the supply curve instead.
Summarize that only changes in the non-price determinants of demand cause the demand curve to shift, while changes in the good's own price cause movements along the demand curve.
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