Answer to Question #196512 in Microeconomics for Dikshya

Question

 Does a change in consumers’ tastes lead to a movement along the demand curve or a shift  in the demand curve? Does a change in price lead to a movement along the demand curve  or a shift in the demand curve? Explain your answers using examples.

Answer 1

A change in consumers' tastes leads to a shift in the demand curve. If the change in consumers' tastes leads to an increase in demand, consumers want to buy more of this good at every price level. Price is measured on the vertical axis, a change in the price represents a movement along the demand curve.