Multiple Choice
Which of the following factors would most directly cause the market demand curve for a normal good to shift to the right (increase) at every price, holding other factors constant?
26
views
3. The Market Forces of Supply and Demand
Shifts in the Demand Curve
Multiple Choice
Which of the following is most likely to shift the demand curve for coffee to the right (increase demand), holding the price of coffee constant?
A
A decrease in the price of coffee
B
An increase in the price of coffee
C
An increase in consumers' income, assuming coffee is a normal good
D
A decrease in the quantity of coffee demanded
Verified step by step guidance1
Understand that a demand curve shows the relationship between the price of a good and the quantity demanded, holding other factors constant.
Recognize that a movement along the demand curve (left or right) is caused by a change in the price of the good itself, not a shift of the curve.
Identify factors that shift the demand curve, such as changes in consumer income, tastes, prices of related goods, expectations, or number of buyers.
Since coffee is assumed to be a normal good, an increase in consumers' income will increase the demand for coffee, shifting the demand curve to the right.
Conclude that changes in the price of coffee cause movements along the demand curve, while an increase in income shifts the demand curve to the right, increasing demand at every price.
Related Videos
Related Practice
