A change market price leads to a movement along a demand curve. A change in a non-price factor which affects demand leads to a change in the demand relationship. A great many non-price factors affect demand. In this chapter, we focus on changes in: tastes, income, price of complements, price of substitutes, and expectations.
A change or shift in demand means that a new demand relationship replaces the previous demand relationship. Different quantities will be demanded at every price after a shift or change in demand. Graphically, we show this with a new demand curve in a different position and possibly with a different slope. Mathematically, we show this by a change in the expression relating quantity demanded to price.
We begin with changes in tastes. We will use the terms tastes and preferences interchangeably throughout this text.
While in college, many students find that their preferences change for: clothing, music, TV shows, movies, cars, books, newspapers, and almost everything else they purchase. The passage of time alone accounts for some of this change, but the effect on tastes of education, new friends, new experiences and new ideas can be profound.
Tastes change due to experience, aging, changing styles, newspaper articles, news reports, and even changes in the seasons and climate. Even songs, novels, movies and TV shows can change consumers' tastes.20 Advertisers attempt to affect tastes through commercials, product endorsements by celebrities, product placements in movies and TV shows, and more recently through product placement in video games and novels. Friends and family members may affect tastes, either because one consciously or unconsciously emulates them, or strives to prove their lack of influence.
This is not a new phenomenon. In the 1934 movie It Happened One Night, Clark Gable takes off his shirt to reveal that he is not wearing an undershirt. Many credit this scene with a subsequent large drop in sales of mens' undershirts.