A change in consumer’s expectations causes a movement along the demand curve or a shift in the demand curve? Explain. A change in price of the goods results in a movement along the demand curve or a shift in the demand curve? Explain
A change in consumer’s expectations causes a movement along the demand curve or a shift in the demand curve? Explain. A change in price of the goods results in a movement along the demand curve or a shift in the demand curve? Explain
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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- A change in consumer’s expectations causes a movement along the
demand curve or a shift in the demand curve? Explain. A change inprice of the goods results in a movement along the demand curve or a shift in the demand curve? Explain (Word count: 250 words max.)
Buyers' expectations about future prices can affect the demand curve. If consumers expect prices to increase, they buy more of a product now, and the demand curve moves to the right.
- A demand schedule for a normal good is as follows:
Price Quantity demanded
Rs.230 70
210 90
190 110
170 130
- Do you think that the increase in quantity demanded (say, from 90 to 110 in the table) when price decreases (from Rs.210 toRs.190) is due to a rise in consumers’ income? Explain clearly (and briefly) why or why not.
- Now suppose that the good is an inferior good. Would the demand schedule still be valid for an inferior good?
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