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If the economy booms and incomes rise, what happens in the markets for inferior goods?
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3. Supply and Demand
Supply and Demand Together: One-sided Shifts
Scelta multipla
Gum and mints are substitutes. If the price of gum increases, what happens in the market for mints?
A
The supply curve shifts to the left
B
The supply curve shifts to the right
C
The demand curve shifts to the left
D
The demand curve shifts to the right
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Identify the relationship between gum and mints: they are substitutes, meaning if the price of one increases, consumers may switch to the other.
Consider the effect of an increase in the price of gum: as gum becomes more expensive, consumers will look for alternatives, increasing the demand for mints.
Analyze the demand curve for mints: with more consumers wanting mints due to the higher price of gum, the demand curve for mints will shift to the right.
Understand the implications of a rightward shift in the demand curve: this indicates an increase in the quantity demanded at each price level for mints.
Conclude that the supply curve for mints remains unchanged: the shift is solely in the demand curve due to the substitution effect from the price increase of gum.
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