Does a change in consumers' tastes lead to a movement along the demand curve or to a shift in the demand curve? Does a change in price lead to a movement along the demand curve or to a shift in the demand curve? Explain your answers.

The answers are as follows:

A change in consumer tastes leads to a shift in the demand curve

A change in prices leads to a movement along the demand curve

Explanation:

The demand curve depicts the relationship between the quantity demanded at given prices in a market. When examining this relationship all other factors, except price and quantity, are held constant. When the price, which is the stimulus for demand, changes, then the quantity demanded will change leading to a movement along the demand curve. When any of the factors (which are held constant) affect consumer demand, then the demand curve would shift. These factors would include: changes in disposable income, prices of related goods (complements or substitutes) and consumer preferences or expectations among others. A change in any of these factors would result in a shift of the demand curve.

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