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ModULE 1.4
Changes in Tastes Why do people want what they want?
Fortunately, we don’t need to answer that question — we just
need to acknowledge that people have certain preferences, or
tastes, that determine what they choose to consume and that
these tastes can change. Economists usually lump together
changes in demand due to fads, beliefs, cultural shifts, and
so on under the heading of changes in tastes.
Consider this recent example: In a press release in July
2020, the Centers for Disease Control and Prevention (CDC)
recommended that Americans wear masks to prevent the
spread of the COVID-19 virus. As a result, many people who Kar-Tr/Getty Images
did not previously own masks began purchasing and wear-
ing them. Requirements that masks be worn in certain situ-
ations — for example, on airplanes and federal properties — followed. The result of the
CDC recommendation and the mask requirements was a change in tastes and prefer-
ences that affected the demand for masks: Many people preferred to wear masks after
the CDC announced that they could prevent the transmission of the COVID-19 virus
and after they were required for important activities like travel and work.
Economists have little to say about the forces that influence consumers’ tastes.
(Marketers and advertisers, however, have plenty to say about them!) However, a change
in tastes has a predictable impact on demand. When tastes change in favor of a good,
more people want to buy it at any given price, so the demand curve shifts to the right.
When tastes change against a good, fewer people want to buy it at any given price, so
the demand curve shifts to the left.
Changes in the Prices of Related Goods or Services While there’s nothing quite
like a comfortable pair of all-cotton blue jeans, for some purposes khakis — typically Two goods are substitutes if a
rise in the price of one of the
made from polyester blends — aren’t a bad alternative. Khakis are what economists call goods leads to an increase in
a substitute for jeans. A pair of goods are substitutes if a rise in the price of one good the demand for the other good.
(jeans) makes consumers more willing to buy the other good (polyester-blend khakis).
Substitutes are usually goods that in some way serve a similar function: coffee and tea, Two goods are complements if
muffins and doughnuts, train rides and airplane rides, lumber and plastic composites. a rise in the price of one of the
A rise in the price of the alternative good provides an incentive for some consumers goods leads to a decrease in the
to purchase the original good instead of the alternative good, shifting demand for the demand for the other good.
original good to the right. Likewise, when the price of the alternative good falls, some
consumers switch from the original good to the alternative, shifting the demand curve
for the original good to the left.
But sometimes a fall in the price of one good makes consumers more willing to
buy another good. Such pairs of goods are known as complements. Complements are
goods that in some sense are consumed together: smartphones and apps, cookies and
milk, cars and gasoline. Because consumers like to consume a good and its comple-
ment together, a change in the price of one of the goods will affect the demand for its
complement. In particular, when the price of one good rises, the demand for its com-
plement decreases, shifting the demand curve for the complement to the left. So a rise
in the price of cookies is likely to cause a leftward shift in the demand curve for milk,
as people consume fewer snacks of cookies and milk. Likewise, when the price of one Felix Choo/Alamy
good falls, the demand for its complement increases, shifting the demand curve for the
complement to the right. This means that if, for some reason, the price of cookies falls,
we should see a rightward shift in the demand curve for milk, as people consume more
cookies and more milk.

Changes in Income Limited income is a constraint on consumers’ purchasing deci-
sions. When individuals have more income, they are normally more likely to purchase
a good or service at any given price. For example, if a family’s income rises, it is more
likely to take that summer trip to Disney World — and therefore also more likely to buy
plane tickets. So a rise in consumer incomes will cause the demand curves for most
goods to shift to the right.

Module 1.4 Demand 33
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