Real Estate Council of Alberta Fundamentals Practice Exam

What causes the quantity demanded for a product to shift?

1. Change in price

2. Change in tastes, expectations, and number of consumers

3. Government regulations

4. Changes in production costs

The correct answer is: Change in tastes, expectations, and number of consumers

A shift in the quantity demanded for a product occurs due to factors that influence consumers' willingness to buy at various price points, but not solely due to price changes. When we consider changes in tastes, expectations, and the number of consumers, these factors can lead to a fundamental change in overall demand. For example, if there is a change in consumer preferences—say, a new trend emerges that increases the popularity of a product—more consumers may wish to purchase that product even if its price remains constant, leading to an increase in demand. Similarly, if consumers expect prices to rise in the future, they may increase their current demand for the product. Additionally, if the number of consumers in the market grows, this will naturally lead to a higher demand as more individuals want to purchase the product. In contrast, a change in price causes a movement along the demand curve rather than a shift of the curve itself, as consumers typically buy more or less of a product based on its price relative to their budget. Government regulations can affect market conditions or costs of doing business, but they do not directly cause a shift in the quantity demanded. Changes in production costs primarily impact supply rather than demand, indicating a differentiation in how and why demand shifts occur.