Chapter 4, Problem 1CQQ

To determine

The determinants of the demand curve.

Answer to Problem 1CQQ

Option ‘b’ is the correct answer.

Explanation of Solution

Option (b):

A change in price of hamburgers leads to a movement along the demand curve and not a shift of the demand curve because price is measured on the vertical axis of a demand curve.  Thus, option ‘b’ is correct.

Option (a):

Hot dogs can be considered as substitutes of hamburgers. A change in the price of a substitute good shifts the demand curve of a good. Thus, a change in price of hot dogs shifts the demand curve of hamburgers. So, option ‘a’ is incorrect.

Option (c):

Hamburger buns can be considered as complementary goods of hamburgers. A change in the price of a complementary good shifts the demand curve of a good. Thus, a change in the price of hamburger buns shifts the demand curve of a hamburger. So, option ‘c’ is incorrect.

Option (d):

A change in the income of a consumer of a good shifts the demand curve of that good. Thus, a change in the income of hamburger consumers shifts the demand curve of hamburger. So, option ‘d’ is incorrect.

Economics Concept Introduction

Concept introduction:

Complementary good: It is a good with a negative cross elasticity of demand, that is, a good whose demand is increased when the price of another good is decreased.

Substitute good: It is a good with a positive cross elasticity of demand, that is, a good whose demand is decreased when the price of another good is decreased.