Which statement best explains how a change in consumer tastes affects the demand for a good, holding price and other factors constant?

• A. A change in consumer tastes affects only supply, shifting the supply curve while demand remains unchanged.
• B. If consumer tastes shift in favor of the good, the quantity demanded increases and the demand curve shifts upward along the same curve.
• C. Consumer tastes affect demand only by changing the market price, so the demand curve does not shift.
• D. If consumer tastes shift in favor of the good, demand increases and the demand curve shifts right; if tastes shift away, demand decreases and the curve shifts left.

Answer: (D)

Verified step by step guidance

1. Understand that consumer tastes are one of the non-price determinants of demand, meaning they affect demand independently of the good's price.
2. Recall that a change in consumer tastes that favors a good increases consumers' willingness to buy that good at every price, causing the entire demand curve to shift to the right.
3. Conversely, if consumer tastes shift away from the good, consumers want less of it at every price, shifting the demand curve to the left.
4. Recognize that this shift in the demand curve is different from a movement along the demand curve, which happens only when the price changes.
5. Therefore, a change in consumer tastes changes demand by shifting the demand curve either right or left, holding price and other factors constant.