Which term describes shifts in the demand curve caused by non-price factors such as tastes, income, and expectations?

Which term describes shifts in the demand curve caused by non-price factors such as tastes, income, and expectations?

• A. Changes in Demand
• B. Movements Along Demand Curve
• C. Law of Demand
• D. Elastic Demand

Answer: (A)

Changes in demand describe the situation where the entire demand curve shifts to the left or right because of non-price factors like tastes, income, and expectations. When people’s preferences rise for a product, or incomes increase, or they expect prices to rise in the future, they’re willing to buy more at every price, so the curve moves to the right. If these factors reduce desired purchases, the curve shifts left. This is different from a movement along the demand curve, which occurs only when the price of the good itself changes—other things held constant. The law of demand explains the inverse price–quantity relationship but doesn’t describe a shift of the curve. Elastic demand refers to how responsive quantity demanded is to price changes, not to shifting due to non-price factors. So the term for shifts caused by tastes, income, and expectations is changes in demand.

Changes in demand describe the situation where the entire demand curve shifts to the left or right because of non-price factors like tastes, income, and expectations. When people’s preferences rise for a product, or incomes increase, or they expect prices to rise in the future, they’re willing to buy more at every price, so the curve moves to the right. If these factors reduce desired purchases, the curve shifts left.

This is different from a movement along the demand curve, which occurs only when the price of the good itself changes—other things held constant. The law of demand explains the inverse price–quantity relationship but doesn’t describe a shift of the curve. Elastic demand refers to how responsive quantity demanded is to price changes, not to shifting due to non-price factors.

So the term for shifts caused by tastes, income, and expectations is changes in demand.