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Question
Answer the following question:
How would the demand for a commodity be affected by a change in the "tastes and preferences" of the consumers in favour of the commodity? Explain using a diagram.
Solution
In the figure, initially at price OP1, consumer purchases OQ1 units of good. With the change in the taste and preferences of the consumers in favour of the commodity, the demand curve shifts parallelly outwards to D'D'. At the new demand curve, the consumer purchases more units of the good (OQ2) but at the same price of OP1.
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