Arrange the following factors that can shift the demand curve in the correct order of their impact on consumer demand: A) Change in consumer preferences, B) Change in income, C) Change in prices of related goods, D) Change in population size.

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Seekh · Accepted Answer

The biggest effect on demand comes from a change in consumer preferences, because when people suddenly like or dislike a product, they buy much more or less of it. Next, a change in income matters; when people earn more they can afford more goods, and when they earn less they buy less. After that, the prices of related goods matter, such as a rise in the price of a substitute which makes the original product more attractive. Finally, changes in population size have the smallest impact, as they only shift demand slowly by adding or removing buyers. For example, if coffee tastes suddenly trendy, demand jumps first, then if incomes rise demand rises further, then if tea prices go up coffee becomes relatively cheaper, and only a big change in the number of people in the city would slowly shift demand.

Arrange the following factors that can shift the demand curve in the correct order of their impact on consumer demand: A) Change in consumer preferences, B) Change in income, C) Change in prices of related goods, D) Change in population size.

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