Consider the following statements about the factors behind the demand and supply curves of a good:
(A) A change in the tastes and preferences of consumers shifts the demand curve.
(B) A change in technology shifts the supply curve.
(C) A change in the prices of inputs shifts the demand curve.
(D) A change in the number of consumers shifts the demand curve.
(E) A change in the prices of related commodities shifts the supply curve.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → (A), (B) and (D) only
(A) A change in the tastes and preferences of consumers shifts the demand curve. — Correct. Tastes are a buyers’ factor, so a change in them shifts demand.
(B) A change in technology shifts the supply curve. — Correct. The supply curve shifts with changes in technology or cost of production.
(C) A change in the prices of inputs shifts the demand curve. — Incorrect. Input prices change firms’ costs, so they shift supply. What buyers want does not depend on input prices.
(D) A change in the number of consumers shifts the demand curve. — Correct. More or fewer buyers change the quantity demanded at every price, so demand shifts.
(E) A change in the prices of related commodities shifts the supply curve. — Incorrect. The prices of related goods change what buyers want, so they shift the demand curve.
This question uses Theory of Consumer Behaviour and Market Equilibrium together.
NCERT (2026-27): “Demand Shift … Here we consider the example of a normal good like clothes, the demand for which increases with increase in income of consumers, thereby causing a rightward shift in the demand curve. However, this income increase does not have any impact on the supply curve, which shifts only due to some changes in the factors relating to technology or cost of production of the firms.” “Demand Shift … Suppose due to some reason, there is increase in the number of consumers in the market for clothes. As the number of consumers increases, other factors remaining unchanged, at each price, more clothes will be demanded. Thus, the demand curve will shift rightwards.” “Supply Shift … But this increase in input price has no impact on the demand of the consumers since it does not depend on the input prices directly. Therefore, the demand curve remains unchanged. …” Introductory Microeconomics, Chapter 2 (Theory of Consumer Behaviour): “2.4.5 Shifts in the Demand Curve … Given the consumer’s income and her preferences, if the price of a related good changes, the demand for a good at each level of its price changes, and hence, there is a shift in the demand curve. If there is an increase in the price of a substitute good, the demand curve shifts rightward. On the other hand, if there is an increase in the price of a complementary good, the demand curve shifts leftward. The demand curve can also shift due to a change in the tastes and preferences of the consumer. …” |