A Level Economics AQA Practice Exam

What causes a shift in demand?

1. Change in price of the good

2. Seasonal changes

3. Change in economic factors

4. Increase in supply

The correct answer is: Change in economic factors

A shift in demand refers to a change in the quantity demanded for a good or service at every price level, rather than a movement along the demand curve which is caused by a change in the good's price. Changes in economic factors, such as consumer income, tastes and preferences, the price of related goods (substitutes and complements), and consumer expectations about future prices can all lead to shifts in demand. For instance, an increase in consumer income may increase demand for luxury goods, causing the demand curve to shift to the right. While seasonal changes can influence demand temporarily, they are generally more specific to certain products (like winter clothing or holiday decorations) and therefore are less comprehensive as a cause of demand shifts than the broader economic factors mentioned. A change in the price of the good leads only to a movement along the curve, not a shift. An increase in supply relates to the supply curve and would indicate changes affecting the quantity supplied rather than the quantity demanded. Thus, the correct option highlights the broader economic influences that impact consumer behavior and demand across the market.