Question

Which of the following factors shift primarily the demand curve and which factors shift primarily the supply curve:

per capita income changes; new technologies; population growth; tastes and preferences; price inputs used in production; prices of other goods consumed; prices of substitute goods in production?

Answer 1

Demand Curve shows the graphical presentation of the relationship between quantity demanded and price.Both price and non-price factors are responsible for shifting the demand curve. Following the non-price factors which cause shifting the demand curve is.

Per capita income changes: changes in the per capita income decrease or increase the demand depending upon increasing or decline of per capita income.

changes in the consumer taste and preference example when consumer income increase consumer assumes certain consumption of goods are inferior, the consumer might changers consumption pattern to higher quality goods

Prices of the other goods consumed example fall in the price of the one goods lead to increase or fall in other goods it again depends on nature of goods substitute or complementary goods.

Supply Curve depicts the functional relationship between quantity demanded and price. Both price and non-price factors are responsible for the shifting supply curve. Following are the non-price factors responsible shifting the supply curve

New technologies improvement in technology results reducing the cost of the production and supply increases.

Population growth means the supply of the labors and increases in the demand for goods show in order to meet the need of the population supply of goods increases by producing the more goods.

Price of the substitute goods in the production process the factors are a substitute for each other fall in the price of the one factors makes inputs cheaper and more factors can be substituted in production process and supply of the goods increases.