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Multiple Choice
The shift from demand curve db to demand curve da in the market for potato chips could be caused by which of the following?
A
A decrease in the price of potato chips
B
An increase in consumer income, assuming potato chips are a normal good
C
An improvement in potato chip production technology
D
A decrease in the price of a substitute good, such as pretzels
Verified step by step guidance
1
Understand that a shift in the demand curve means a change in demand at every price level, not just a movement along the curve caused by a price change of the good itself.
Recall that a decrease in the price of potato chips causes a movement along the demand curve, not a shift, so it cannot explain the shift from demand curve db to da.
Consider that an increase in consumer income will shift the demand curve if the good is normal, meaning consumers buy more at every price when their income rises.
Recognize that an improvement in production technology affects the supply curve, not the demand curve, so it cannot cause the demand curve to shift.
Note that a decrease in the price of a substitute good (like pretzels) would typically cause the demand for potato chips to decrease, shifting the demand curve left, not right.