Question

Answer the following question:
How would the demand for a commodity be affected by a change in the "tastes and preferences" of the consumers in favour of the commodity? Explain using a diagram.

Answer 1

In the figure, initially at price OP₁, consumer purchases OQ₁ units of good. With the change in the taste and preferences of the consumers in favour of the commodity, the demand curve shifts parallelly outwards to D'D'. At the new demand curve, the consumer purchases more units of the good (OQ₂) but at the same price of OP₁.