Multiple Choice
In the market for coffee, suppose tea is a substitute for coffee. If the price of tea increases, what happens to the demand for coffee (all else equal)?
9
views
3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
Multiple Choice
Which of the following is a determinant of demand (i.e., a factor that shifts the demand curve for a good)?
A
The price ceiling set below the equilibrium price
B
A change in the price of the good itself
C
Consumer income (for a normal good)
D
A movement along the demand curve caused by a change in quantity demanded
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 but not shifting the curve.
Identify what causes the demand curve to shift. Factors that shift the demand curve are called determinants of demand and include variables other than the good's own price.
Recognize that consumer income is a key determinant of demand. For a normal good, an increase in consumer income shifts the demand curve to the right (increase in demand), while a decrease shifts it to the left.
Analyze the other options: a price ceiling set below equilibrium affects quantity supplied and can cause shortages but does not directly shift the demand curve; a change in the price of the good itself causes movement along the curve, not a shift.
Conclude that among the options, consumer income (for a normal good) is the correct determinant of demand because it causes the entire demand curve to shift.
Related Videos
Related Practice
