Which statement describes non-price determinants of demand as they relate to the demand curve?

• A. A change in the price of the good.
• B. A change in non-price determinants such as income, tastes, or prices of related goods.
• C. A movement along the demand curve due to a price change.
• D. A change in the supply schedule.

Answer: (B)

Non-price determinants cause the demand curve to shift. When factors like income, tastes, or the prices of related goods change, the quantity people want to buy at every price changes, so the entire demand curve moves left or right. For example, if incomes rise and the good is normal, demand increases and the curve shifts right; if a substitute’s price rises, demand for the good may rise as well; if a complement’s price rises, demand for the good may fall. These factors change demand itself, not just the price of the good.

This is why the statement describing a change in non-price determinants such as income, tastes, or prices of related goods best captures how the demand curve responds. In contrast, a change in the good’s own price causes a movement along the curve, not a shift, and a change in the supply schedule relates to supply, not demand.