Multiple Choice
In microeconomics, what can cause an entire demand curve for a good to shift (rather than 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 is most likely to cause a shift in the demand curve for coffee?
A
An increase in the supply of coffee beans that lowers the market price of coffee
B
A movement along the demand curve due to a change in the quantity of coffee demanded
C
A decrease in consumers' income, assuming coffee is a normal good
D
A decrease in the price of coffee
Verified step by step guidance1
Step 1: Understand the difference between a shift in the demand curve and a movement along the demand curve. A shift in demand means the entire demand curve moves left or right due to factors other than the good's own price, while a movement along the demand curve happens when the price of the good changes, affecting quantity demanded.
Step 2: Analyze each option to determine if it causes a shift or a movement along the demand curve. For example, a change in the price of coffee causes a movement along the demand curve, not a shift.
Step 3: Recognize that an increase in the supply of coffee beans affects the supply curve, not the demand curve, so it does not cause a demand shift.
Step 4: Focus on the effect of a decrease in consumers' income on the demand for coffee, assuming coffee is a normal good. A change in income is a non-price determinant of demand and will cause the demand curve to shift.
Step 5: Conclude that the decrease in consumers' income will shift the demand curve for coffee, typically to the left (a decrease in demand), because normal goods have demand that varies directly with income.
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