The Fad Fades
Tastes turn against a once-trendy product, so demand shifts left and the market shrinks.
The Fad Fades
Supply and DemandTastes turn against a once-trendy product, so demand shifts left and the market shrinks.
Equilibrium at Quantity 57, Price ($) 44
Start in equilibrium
The market for a trendy fitness gadget begins in equilibrium. It sells well at the going price, and sellers are producing exactly the amount buyers want.
Now try it yourself: shift the curves in a graded FRQ drill, or open this graph in the free sandbox.
Students predict what happens before the graph moves. No accounts, nothing graded.
The Fad Fades, step by step
- 1
Start in equilibrium
The market for a trendy fitness gadget begins in equilibrium. It sells well at the going price, and sellers are producing exactly the amount buyers want.
- 2
Tastes turn against it
The trend collapses. Videos about it stop circulating, friends stop wearing it, and shoppers simply lose interest. Tastes are a determinant of demand, so at every price fewer people want one. Demand shifts left.
- 3
A surplus appears
At the original price, stores are still stocked with the old quantity while far fewer buyers want one. Boxes pile up in the warehouse, and that surplus is what forces the price down.
- 4
New equilibrium
The falling price pulls back a few bargain hunters and persuades sellers to offer less, until the surplus clears. The gadget settles at a lower price and a lower quantity than during the craze.
- 5
Cause and effect run one way
The price did not cause the collapse in interest. Tastes changed first, which moved the whole demand curve, and the lower price was the RESULT. Writing that the price fell so demand fell reverses the causal chain and is a classic exam error.
Where it ends up
A change in tastes away from a good shifts demand left, so the equilibrium price falls and the equilibrium quantity falls.
Now draw it yourself
Same graph, graded on whether you move the right curve and leave the rest alone.
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