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Homework answers / question archive / Give 3 possible reasons (based on the other determinants) for the change in the demand curve and explain why

Give 3 possible reasons (based on the other determinants) for the change in the demand curve and explain why

Economics

Give 3 possible reasons (based on the other determinants) for the change in the demand curve and explain why

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The three possible reasons for the change in the demand curve are as follows:

Firstly the demand curve shifts due to a change in the level of income. When the level of income increases or decreases it has a direct impact on the quantity demanded by the individual. An increase in income leads to a rise in the quantity demanded of a certain good (assuming that the good is a normal good) which is represented by a rightward shift of the demand curve. And a decrease in the income level leads to a fall in the quantity demanded of a certain good which is shown by a leftward shift of the demand curve.

The next factor could be the change in tastes or preferences. When there is a shift or a change in consumer preferences he would want to consume some other good over the current good. When this happens there is a change in the quantity demanded of this good and thus there is a shift in the demand curve.

Lastly, the price of related goods can also affect the demand and thus change the quantity demanded for a good. For example: If there are two goods which are substitutes, then a fall in the price of the substitute good will lead to a rise in the quantity demanded of that good and thus a fall in quantity demanded for this good. When this happens the demand curve will shift leftward and the demand for this good falls down.