Only one thing can cause movement along a product\'s demand curve that is, cause
ID: 1162690 • Letter: O
Question
Only one thing can cause movement along a product's demand curve that is, cause a change in quantity demanded for that product and that's:a change in that product's price. On the other hand, there are five key variables that can cause a product's demand curve to shift to the left or right -- that is, lead to a change in demand. Coca-Cola is experiencing shifts in the U.S. demand curve for its famous cola soft drink, as the huge post-World War II "Baby Boom" generation has aged beyond their prime soft drink consumption years, and as the smaller generations behind the Baby Boomers have been buying relatively more energy drinks, water, juice, and tea, and relatively less soda than previous generations. What two key variables are affecting demand for Coca-Cola in the U.S., and in which direction are these variables shifting the demand curve for Coke?Explanation / Answer
As the question has discussed. Changes in the price of own product can bring only a movement, up or down, along the same demand curve, However, for a shift to be a result, there must be a change in other factors than the price Here we see two such factors :
* Reduction in the number of buyers :- The huge "Baby Boom" generation has aged and so the consumption has fallen due to reduction in the number of consumers buying the product. Due to lower number of loyal consumers, The demand curve for cola is shifting to the left.
* Change in tastes :- The smaller generations behind the Baby Boomers have been buying relatively more energy drinks water, juice and tea and relatively less soda than previous generations. Since there has been a gradual change in the preferences of the consumers, the demand curve for cola is shifting to the left.
The result is a fall in the quantity demanded and supplied as well as the price of Cola.
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