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Question

How does a favourable change in taste for a commodity affect the market price and quantity exchanged for the commodity? 


Solution

A favourable change in taste for a commodity (say, jeans) will cause an increase in the demand for a commodity (jeans). As a result, the demand curve of the commodity will shift to the right. The supply curve of the commodity remains the same and this will lead to a rise in the market price of the commodity, and an increase in quantity demanded.
It is clear from the diagram that as a result of the increase in demand, the demand curve shifts rightwards. As a result, the price rises from OP to OP1 and quantity rises from OQ to OQ1.

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