Multiple Choice
Which of the following is most likely to cause an entire demand curve for a good to shift (rather than a movement along the demand curve)?
20
views
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 (i.e., change demand rather than quantity demanded)?
A
Consumers’ incomes increase and coffee is a normal good.
B
A government price ceiling makes coffee cheaper to buy.
C
The price of coffee increases.
D
The price of coffee decreases.
Verified step by step guidance1
Understand the difference between a change in demand and a change in quantity demanded: A change in demand means the entire demand curve shifts either to the right (increase) or left (decrease), while a change in quantity demanded means movement along the same demand curve due to a change in the price of the good.
Identify factors that cause a demand curve to shift: These include changes in consumer income, tastes and preferences, prices of related goods (substitutes or complements), expectations about future prices, and the number of buyers.
Analyze the effect of an increase in consumers' incomes when coffee is a normal good: Since coffee is a normal good, an increase in income will increase consumers' willingness and ability to buy coffee at every price, causing the demand curve to shift to the right.
Evaluate the impact of a government price ceiling making coffee cheaper: This affects the price of coffee directly, leading to a movement along the demand curve (change in quantity demanded), not a shift in demand.
Recognize that changes in the price of coffee itself (increase or decrease) cause movements along the demand curve, not shifts in the demand curve.
Related Videos
Related Practice
