Refer to the figure below. Suppose the solid line shows the current demand for coffee. In response to a news story explaining that coffee causes heart disease, you should expect:
A. neither a change in quantity demanded nor a shift in demand.
B. the quantity of coffee demanded to decrease, but no shift in the demand curve.
C. the demand curve to shift to D(A) because some people will stop drinking coffee.
D. the demand curve to shift to D(B) in anticipation of higher future prices.
Answer: C
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An upward sloping short-run aggregate supply curve suggests that
A) prices and wages are completely inflexible. B) prices and wages adjust in part to short-run demand changes. C) prices and wages are completely flexible. D) real GDP is determined by aggregate supply.
If Year 2 is the base year, the real GDP of Year 1 is
A) $800. B) $1050. C) $1900. D) $2400.
Which of the following is excluded in the current account?
a. Goods exports. b. Goods imports. c. Capital inflow and outflow. d. Net unilateral transfers.
Normative economic principles are concerned with how people ________ make decisions while positive economic principles are concerned with how people ________ make decisions.
A. in ordinary life; in power B. should; do C. do; should D. in power; in ordinary life