List the factors change demand and shift the demand curve. Tell what happens to demand and the demand curve when there is an increase in the factor
What will be an ideal response?
One factor that changes demand is a change in income. An increase in income increases demand and shifts the demand curve rightward for a normal good. An increase in income decreases demand and shifts the demand curve leftward for an inferior good. A change in the price of a substitute or complement also changes demand. An increase in the price of a substitute increase demand and shifts the demand curve rightward while an increase in the price of a complement decreases demand and shifts the demand curve leftward. Expectations, the population, and preferences also change demand. If people expect their income to increase, or if they expect the price of the good to be higher in the future, or if the population increases (so that the number of buyers increases), or if people's preferences for the good increase, demand increases and the demand curve shifts rightward.
You might also like to view...
The shift of the short-run Phillips curve in the figure above is the result of
A) an increase in the natural unemployment rate. B) a decrease in the expected inflation rate. C) a decrease in the actual inflation rate. D) an increase in the expected inflation rate. E) a decrease in the natural unemployment rate.
Refer to Figure 2-14. What is the opportunity cost of producing 1 snow cone in Iceland?
A) 2/3 of a popsicle B) 3/4 of a popsicle C) 1 1/2 popsicles D) 180 popsicles
Four possibilities have probabilities 0.4, 0.2, 0.2 and 0.2 and values $40, $30, $20, and $10 respectively. The expected value is:
a. $22 b. $24 c. $26 d. $28
If people expect inflation to increase in the future, explain what will happen to consumption and saving