Deborah J. answered • 10d
Student majoring in Business Management, Entrepreneurship concen.
Trends and fads influence customer needs and wants by shifting the basic psychological and economic drivers of a market. In macroeconomics, a fad specifically alters consumer tastes and preferences, causing the demand curve to shift to the right as a product becomes popular and everyone needs to own it. This surge in demand often creates a temporary shortage, allowing companies to raise prices as the population's willingness to pay increases.
As the trend peaks, the supply curve typically shifts to the right as well, because more manufacturers enter the market to capitalize on the high prices and increased interest. However, once the novelty wears off, a process known as taste fatigue, the demand curve shifts back to the left. The decline of a fad like fidget spinners is often characterized by a surplus, where the supply produced by companies exceeds the now-dwindling customer interest. Market equilibrium occurs at the point where these supply and demand curves intersect, representing the price and quantity where both the consumers and the producers agree. In the volatile cycle of a fad, this equilibrium is often unstable, moving rapidly upward during the height of the trend and dropping sharply once the product is no longer considered a want.
