Economics: Principles, Problems, and Policies, 19th Edition

Published by McGraw-Hill Education
ISBN 10: 0073511447
ISBN 13: 978-0-07351-144-3

Chapter 3 - Demand, Supply, and Market Equilibrium - Questions: 2

Answer

The determinants of demand are: the prices of goods and services, preferences of consumers, prices of substitute and complementary goods, income of consumers and consumer expectations. The demand curve will shift to the right if there is an increase in demand and will shift to the left if there is a decrease in demand. There will be a movement along the demand curve (change in quantity demanded) if there is a change in price. A change in price will not shift the demand curve.

Work Step by Step

A shift in the demand curve is caused by preferences of consumers, prices of substitute and complementary goods, income of consumers and consumer expectations and not the price of the good. Changing the price of the good, will only cause a movement along the demand curve, which is a change in the quantity demanded and will not shift the demand curve.
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