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conditions of demand
. 

A rise in 
household income
(including a reduction in direct taxes) 

A rise in the price of 
substitutes

A fall in the price of 
complements

A change in 
tastes
towards this product 

An 
expected rise
in the price of the product

An 
increase 
in population 
Figure 4 shows an outward shift in the demand curve, but conversely a fall in demand at each price 
level would be represented by a shift in the opposite direction: to the 
left
of the demand curve. Such a 
shift may be caused by the opposite of the conditions of demand shown above. 
4.12 Demand, fashion and expectations 
A change in fashion or tastes will also alter the demand for a product. For example, if it becomes 
fashionable for middle-class households in the UK to drink wine with their meals, expenditure on wine 
will increase. There may be passing 'crazes', such as roller blades or skateboards. And tastes can be 
affected by advertisers and suppliers trying to 'create' demand for their products. However, the effect of a 
product becoming fashionable will be that demand for it rises without its price having to be reduced. 
If consumers believe that prices will rise, or that shortages will occur, they may attempt to stock up on 
the product before these changes occur. Again, this could lead to increases in demand, despite the price 
of the good remaining unchanged. 
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PART A: THE BUSINESS ORGANISATION, ITS STAKEHOLDERS AND THE EXTERNAL ENVIRONMENT 
 
102
 
Price of 
the good
($)
Quantity demanded
P
1
X
Y
D
1
D
0
0
Shift in demand
Expansion of demand
Contraction of demand
Figure 4 Changes in quantity demanded and outward shift of the demand curve