When a nonprice determinant of demand changes, which of the following occurs?

• A. There is movement along the demand curve.
• B. The supply curve shifts.
• C. The equilibrium price remains unchanged.
• D. The demand curve shifts to the left or right.

Answer: (D)

Verified step by step guidance

1. Understand that a nonprice determinant of demand refers to factors other than the price of the good itself, such as consumer income, tastes, prices of related goods, expectations, and number of buyers.
2. Recall that a change in the price of the good causes movement along the demand curve, while a change in a nonprice determinant causes the entire demand curve to shift.
3. Recognize that when a nonprice determinant changes, the demand curve shifts either to the right (increase in demand) or to the left (decrease in demand), indicating a change in quantity demanded at every price.
4. Note that this shift in the demand curve affects the market equilibrium by changing the equilibrium price and quantity, so the equilibrium price does not remain unchanged.
5. Conclude that the correct outcome of a change in a nonprice determinant of demand is a shift of the demand curve, not movement along it or a shift in the supply curve.