The imposition of tariffs is one form of intervention on the market for luxury bags that the government may undertake. Tariffs are taxes that are levied on imported goods; in this instance, the government may employ tariffs to restrict the supply of luxury handbags produced by foreign manufacturers; this may result in an increase in the market share held by domestic suppliers while simultaneously reducing the overall supply of luxury handbags. The adoption of tariffs produces an inward shift of the supply curve, which leads to a fall in the equilibrium price and quantity of luxury bags. This can be shown using the supply and demand curves that are shown below. The economic goal of the government behind the application of tariffs is to safeguard domestic producers of luxury bags and to boost the competitiveness of the domestic market. This goal is accomplished by the implementation of tariffs. 

Reference:

• Identify and explain two factors that have caused a shift in the demand curve. Illustrate the impact on the market using supply and demand curves. (6 marks)

1. factors causing shift in Demand Curve hand bags

a. An Increase in Consumer Income: There is a possibility that there will be an increase in demand for luxury bags if there is an increase in the average income of consumers. This is as a result of the fact that customers now have the opportunity to acquire more luxury bags as a direct result of their higher salaries, which in turn has led to an increase in the demand for bags of this type. This can be demonstrated with the supply and demand curves shown below, which show that an increase in consumer income results in an upward shift of the demand curve, which in turn produces an increase in the equilibrium price as well as the quantity of luxury bags.

b. An Increase in Fashion Trends: An increase in the number of fashion trends being worn might also lead to an increase in the number of people looking for luxury bags. This is because the most recent fashion trends can have an effect on a consumer's desire to purchase luxury bags, which in turn leads to a rise in the demand for such bags. This may be seen by looking at the supply and demand curves shown below, which show that an increase in fashion trends results in an outward movement of the demand curve, which in turn produces an increase in the equilibrium price and number of luxury bags.