Question

Does a change in consumer tastes cause a movement along the demand curve or a shift in the demand curve? Explain.

Answer 1

Movement along the demand curve happens when there is change in price. On the other hand, shift in the demand curve happens when there is change in factors affecting demand of the commodity other than price of the commodity.

Factors other than price affecting demand of the commodity are as follows -

1. Price of related goods (Substitute goods and complementary goods)

2. Income of the consumer

3. Taste and preferences

4. Future expectations with respect to the price

Thus, it can be seen that change in tastes and prefernces brings a shift in the demand curve.

So, a change in consumer tastes cause a shift in the demand curve.