Why does demand not change when the price of a good changes with no change in the other influences on buying plans?
What will be an ideal response?
If the price of a good falls and nothing else changes, then the quantity of the good demanded increases and there is a movement down along the demand curve, but the demand for the good remains unchanged and the demand curve does not shift.
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Based on the figure below. Starting from long-run equilibrium at point C, a decrease in government spending that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at__ creating _____gap.
A. B; no output B. D; an expansionary C. B; recessionary D. D; a recessionary
When there is a negative externality, the competitive output is greater than the economically efficient output level
Indicate whether the statement is true or false
Sam is suing someone in court for $10,000. The probability that Sam will lose the case is 1/h where h is the number of hours that Sam's attorney works on the case
The lawyer charges $500 per hour if he is to be paid hourly, or he requests 20% of the settlement if he is to be paid on a contingency basis. Assuming both Sam and the attorney are risk-neutral wealth maximizers, is either contract efficient?
A monopoly firm can sell its fourth unit of output for a price of $250. To sell more than five units, it must expect to receive a price:
A. equal to $250. B. greater than $250. C. less than $250. D. equal to $340.