Economics – The allocation of resources - Demand | e-Consult
The allocation of resources - Demand (1 questions)
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Answer: Consumer tastes and preferences are a fundamental determinant of demand. If consumer tastes shift towards a particular product, demand for that product will increase. This is because consumers want to buy more of the product, leading to a higher quantity demanded at each price level.
Explanation: Consumer tastes are influenced by many factors, including advertising, social trends, celebrity endorsements, and changes in lifestyle. When a product aligns with prevailing tastes, demand rises. Conversely, if tastes shift away from a product, demand falls.
Examples:
- Increased demand for plant-based foods: Growing awareness of health and environmental issues has led to increased consumer preference for plant-based alternatives like vegan burgers and dairy-free milk. This has resulted in a significant increase in demand for these products.
- Fashion trends: A sudden popularity of a particular fashion style (e.g., a specific type of clothing or accessory) will increase demand for those items. This is often driven by celebrity endorsements or social media influence.
- Demand for electric vehicles: Increasing concern about climate change and government incentives have boosted consumer preference for electric vehicles, leading to a rise in demand.