CA Foundation · Business Economics · Theory of Demand and Supply
Which of the following is correctly classified as a determinant that shifts the demand curve, rather than causing a movement along it?
A change in consumers' tastes and preferences shifts the demand curve. Changes in the good's own price only cause movements along the same curve, as expansion or contraction of demand, whereas non-price determinants like tastes, income and related prices move the entire curve.
- AA change in the price of the good itself
- BA change in consumers' tastes and preferencesCorrect
- CA fall in the price of the good leading to higher purchases
- DA rise in the good's own price leading to lower purchases
Explanation
Own price changes cause movements along a given demand curve (expansion or contraction). Tastes and preferences are non-price determinants, so a change in them shifts the whole curve. The other options all describe responses to the good's own price.
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