loans

Why do preferences change? Preferences change because people change and because they acquire new information. Consider how consumers are responding to the popularity of the Atkins diet. The demand for high-carbohydrate foods like white bread has fallen substantially, while the demand for low-carbohydrate foods like beef has risen. This is a major change from the 1990s when the demand for beef fell because of the “heart-healthy’’ eating habits consumers preferred then. Trends in the markets for clothing, toys, collectibles, and entertainment are constantly causing changes in the demand for these products as well. Firms may even try to change consumer preferences for their own products through advertising and information brochures.

The demand for many products is strongly influenced by the demographic composition of the market. An increase in the elderly population in the United States in recent years has increased the demand for medical care, retirement housing, and vacation travel. The demand curves for these goods have shifted to the right. During the 1980s, the number of people ages 15-24 fell by more than 5 million. Because young people are a major part of the U.S. market for jeans, the demand for jeans fell by more than 100 million pairs over the course of the decade.

Consumers’ expectations about the future also can affect the current demand for a product. If consumers begin to expect that a major hurricane will strike their area, the current demand for batteries and canned food will rise. Expectations about the future direction of the economy can also affect current demand. If consumers become pessimistic about the economy, they might start spending less, causing the current demand for goods to fall. Perhaps most important is how a change in the expected future price of a good affects current demand. When consumers expect the price of a product to rise in the future, their current demand for it will increase. Gasoline is a good example. If you expect the price to increase soon, you’ll want to fill up your tank now before the price goes up. On the other hand, consumers will delay a purchase if they expect the item to decrease in price. No doubt you have heard someone say, ‘‘I’ll wait until it goes on sale.” When consumers expect the price of a product to fall, current demand for it will decline.