Future Business Leader Achievments (FBLA) Economics Practice Exam

Which of the following factors can cause a shift in the demand curve?

1. Changes in the number of suppliers

2. Changes in tastes and preferences

3. Changes in technology

4. Changes in production costs

The correct answer is: Changes in tastes and preferences

A shift in the demand curve occurs when the quantity demanded at any given price changes, which can happen for several reasons. Changes in tastes and preferences play a significant role in this process. When consumers’ preferences evolve—perhaps due to trends, advertising, health considerations, or changes in societal norms—this can lead to an increase or decrease in demand for specific goods or services, independently of the product's price. For instance, if a new health study reveals that a certain food item is beneficial for health, consumers may develop a preference for that food, leading to an increase in its demand. Consequently, the demand curve would shift to the right. Conversely, if a shift occurs away from a product due to factors such as negative publicity or changing lifestyle trends, the demand would decrease, resulting in a leftward shift of the curve. In contrast, changes in the number of suppliers generally lead to shifts in the supply curve rather than the demand curve. Similarly, changes in technology and changes in production costs primarily affect supply conditions and do not directly relate to alterations in consumer behavior or preferences. Therefore, factors like tastes and preferences directly influence consumer demand, making this option the correct answer.