Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 4 - Part II - The Market Forces of Supply and Demand - Questions for Review: 3

Answer

A change in consumers' taste shifts the demand curve left or right. IF the consumers taste for a particular good increase, they will demand it more. Any increase in the demand results in the demand curve shifting to the right. Similarly, any decrease in the quantity demanded would result in a leftward shift of the demand curve. Change in price results into a corresponding change in the quantity demanded. For example, when the price decreases, the quantity demanded would increase for a given demand curve. Similarly when the price increase the quantity demanded would decrease.

Work Step by Step

The shift in the demand curve due to changing consumer taste is demonstrated in the figure attached. It shows that an increase in demand makes the demand curve shift to the right and a decrease to the left. Also, when price increases, there is a corresponding decrease in the quantity demanded. This change is demonstrated in the figure attached.
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