Multiple Choice
In the theory of shifts in the demand curve, how does an expected increase in the future price of a good affect the current demand for that good, holding all else constant?
3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
If cheese in a can is an inferior good, what happens to its market when consumer income increases?
A
Demand shifts to the left
B
Demand shifts to the right
C
Supply shifts to the left
D
Supply shifts to the right
Verified step by step guidance1
Understand the concept of an inferior good: An inferior good is one for which demand decreases as consumer income increases, contrary to normal goods where demand increases with higher income.
Identify the relationship between consumer income and demand for inferior goods: As consumer income rises, consumers tend to buy less of inferior goods, opting for higher-quality alternatives.
Analyze the impact on the demand curve: Since cheese in a can is an inferior good, an increase in consumer income will lead to a decrease in demand for this product.
Determine the direction of the demand shift: A decrease in demand due to higher income will cause the demand curve to shift to the left.
Conclude the effect on the market: With the demand curve shifting to the left, there will be a lower quantity demanded at each price level, potentially leading to a decrease in market price and quantity sold.
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