Multiple Choice
Which of the following is most likely to cause a shift in a consumer’s demand curve for coffee (not merely a movement along the curve)?
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3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
Multiple Choice
Which of the following changes would cause the demand curve for coffee to shift (not a movement along the curve)?
A
A new sales tax that increases the price consumers pay for coffee
B
A decrease in the price of coffee beans that lowers the cost of producing coffee
C
An increase in consumers' incomes, if coffee is a normal good
D
A decrease in the price of coffee
Verified step by step guidance1
Understand the difference between a movement along the demand curve and a shift of the demand curve. A movement along the demand curve occurs when the price of the good itself changes, affecting quantity demanded. A shift of the demand curve happens when a non-price factor changes, altering demand at every price level.
Analyze each option to determine if it affects the price of coffee directly or other factors influencing demand:
Option 1: A new sales tax increasing the price consumers pay for coffee changes the effective price, causing a movement along the demand curve, not a shift.
Option 2: A decrease in the price of coffee beans lowers production costs, which affects the supply curve, not the demand curve.
Option 3: An increase in consumers' incomes (assuming coffee is a normal good) changes a non-price determinant of demand, causing the entire demand curve to shift to the right (increase in demand). This is a shift, not a movement.
Option 4: A decrease in the price of coffee causes a movement along the demand curve, not a shift.
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