Asked by Jordan Thornhill on Jul 28, 2024
Verified
The following figure shows the market for a good.Which of the following is most likely to shift demand from D' to D?
A) An increase in the price of a substitute good
B) An increase in the number of consumers
C) A decrease in the price of a complementary good
D) A decline in consumers' incomes if it is a normal good
Shift Demand
A change in the amount of a product that consumers are willing and able to purchase at any given price level, typically caused by changes in consumer preferences, income, or prices of related goods.
Substitute Good
A product or service that can be used in place of another to satisfy consumer demand or preferences.
Complementary Good
A good whose demand is increased when the price of another good is decreased, as the two goods are often used together, indicating a positive cross-price elasticity.
- Evaluate the influence of external variables, including technology, income, and consumer preferences, on the equilibrium of markets.
- Survey market environments to examine the impact of supply and demand fluctuations on the directional adjustment in equilibrium price and quantity.
Verified Answer
IH
Isaac HastingsAug 02, 2024
Final Answer :
D
Explanation :
Decline in consumers' incomes if it is a normal good would shift the demand from D' to D. As the consumers' incomes decline, they will have less money to spend on goods and services, including this good, which will decrease demand.
Learning Objectives
- Evaluate the influence of external variables, including technology, income, and consumer preferences, on the equilibrium of markets.
- Survey market environments to examine the impact of supply and demand fluctuations on the directional adjustment in equilibrium price and quantity.