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26 November, 13:52

With respect to each of the following changes, identify whether the demand curve will shift rightward or leftward:a. An increase in income (the good under consideration is a normal good) b. A rise in the price of a substitute good (caused by a decline in supply) c. A rise in expected future price d. A fall in the number of buyers

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  1. 26 November, 14:20
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    A. The demand curve will shift to the right.

    B. The demand curve will shift to the right.

    C. The demand curve will shift to the right.

    D. The demand curve will shift to the left.

    Explanation:

    Demand curve: It is graph plotted to represent relationship between the quantity demanded of a good and its price when all other influences on demand remain constant.

    We know as per law of demand, with the change in price of goods, demand of goods changes. As price increases, demand decreases and as price decreases, demand increases.

    With the decrease in demand, demand curve shift to left side of the graph.

    With the increases in demand, demand curve shift to right side of the graph.

    A. An increase in income will increase the demand of goods, therefore the demand curve will shift to the right.

    B. A rise in the price of a substitute good will increase demand of the product, therefore the demand curve will shift to the right.

    C. A rise in expected future price will increases the current demand for that good, therefore the demand curve will shift to the right.

    D. A fall in the number of buyers will decrease the demand of the product, therefore the demand curve will shift to the left.
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