How would the DEMAND CURVE shift if there was… An increase in income and the good is a normal good A decrease in the price of a substitute good A decrease in population An increase in the taste for the good A decrease in the price of a complimentary good How would the SUPPLY CURVE shift if there was… A decrease in the number of firms in the market A decrease in the current price of the product An increase in productivity A decrease in the expected future price of a product An increase in the price of an input
- For each of the below, indicate if the curve in question would shift to the left, to the right, or not at all. Assume
perfect competition , and that other than the change listed everything else remains the same (i.e. ceteris paribus).
- How would the
DEMAND CURVE shift if there was…
- An increase in income and the good is a normal good
- A decrease in the
price of a substitute good - A decrease in population
- An increase in the taste for the good
- A decrease in the price of a complimentary good
- How would the SUPPLY CURVE shift if there was…
- A decrease in the number of firms in the market
- A decrease in the current price of the product
- An increase in productivity
- A decrease in the expected future price of a product
- An increase in the price of an input
Demand curve shift if :-
1) An increase in the income and the good being a normal good causes the demand for the good to increase as the income increase causes the disposable income to increase and hence increasing the demand . Hence at the given price hence the demand curve shifts to the right .
2) Decrease in price of substitute good causes the demand curve to shift to the left at the same price. Decrease in price of substitute goods causes the consumer to shift his preference towards the substitute and hence reducing the demand .
3) A decrease in the population causes the demand to fall as the people/ consumers reduce in the economy and hence causing the demand to contract in the market.Demand curve shifts to the left.
4) Ab increase in the taste for good is favourable for the demand of the good as the consumer if has taste preferrence towards that good then he would demand more of that good and hence shifting the demand curve to the right .
5) complimentary goods are consumed together so decrease in price of complimentary good will cause the demand for the good to increase. Suppose the tea and sugar are complimentary good and hence decrease in price of sugar causes the demand of tea to increase and hence this would shift the demand curve to right .
Step by step
Solved in 2 steps
