Question

Various factors cause a demand curve to shift. List four different factors and explain them fully as determinants of demand

Answer 1

1. Change in Income: When income changes, quantity demanded changes at all price points. So, the demand curve shifts and there is a change in demand.

2. Change in tastes and preferences: When there is a change in tastes and preferences, the quantity demanded changes at each price point. Therefore, there is a change in demand and the demand curve shifts.

3. Change in price of related goods: When there is a change in the price of related goods, the quantity demanded for a good changes at each price. Therefore, there is a change in demand and the demand curve shifts.

4. Change in number of consumers: When there is an increase in consumers, demand increases and when there is a fall in the number of consumers, there is a decrease in demand.