What does it mean for something to become popular, fashionable, stylish, or hip? Consider the graph to the right, showing the market for Women's Board Shorts (shorts styled like those worn while surfing) in some US city.
DWBS-1 illustrates demand for women's board shorts before they became "hip" as street clothing. (Graphs and numbers are not based on actual data but are simply illustrations.) Suppose before this clothing became "hip" the average price for a pair of women's board shorts was $25 and an average of 50,000 pairs per year were sold in the city.
Now that women's board shorts are hip even for non-surfers, style conscious consumers are willing to pay more for them, especially the hippest brand (if you need to ask.. : ). Another way of saying this is that style conscious consumers are willing to buy more of these shorts at any given price. However you want to think of it, when something becomes hip there is an increase in demand or a shift out in demand. The demand curve shifts up and to the right. In our graph we show this as a shift from DWBS-1 to DWBS-2.
An increase in demand leads, in the short run, to an increase in equilibrium price and equilibrium quantity purchased. In the graph above we show price increasing from $25 to $60 and quantity from 50,000 to 120,000 (remember, these numbers are supplied simply for illustration). When something becomes "hip" the short-run effect is that the demand curve shifts out so the amount sold and the market price both increase.
More on Surf Fashions