The graph to the right is the same as the one shown on the previous page. We show the demand curve for Women's Board Shorts shifting out to the right from DWBS-1 to DWBS-2, but we also show DWBS-2 as a steeper curve. This is to illustrate that demand has become more inelastic, in addition to simply increasing. Remember, that while slope and elasticity aren't the same, more inelastic demand is illustrated with steeper demand curves. Below we illustrate the case when demand shifts out just as much at the original price of $25, but has not become more inelastic.
For the style conscious consumer, wearing whatever is currently in style is very important. This importance means that even as the price rises the desired quantity demanded doesn't fall by very much. In other words, demand becomes very inelastic. In the graph to the left DIn is the inelastic demand curve shown before, while DEl illustrates demand that increased by as much at a price of $25, but is more elastic. If demand had shifted out as far, but had not become inelastic, both price and quantity would still have risen, but by less, as we see with DEl. We can easily see that one of the reasons prices for hip clothing is so high is that demand increases, but also becomes more inelastic.
It is more difficult to predict what will happen in the long run. If this fad really catches on more firms will enter the industry producing similar clothing, some at lower prices than the hippest brands. A problem faced by the hippest brands is how to make sure their brand is important enough that consumers are willing to pay a premium when cheaper alternatives are available. This usually means lots of advertising, product placement, and celebrity endorsements.
Some types of clothing, like jeans, manage to stay relatively "cool" for decades while others, such as leisure suits, have a shorter fashion lifespan. You can, however, be fairly sure when your professor shows up to teach in board shorts that this style is no longer hip :).
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