Figure 2.1.2
-Refer to Figure 2.1.2. If the price of coffee decreases, from $7.50 to $6.00 per pound, which of the following will occur?
A) The quantity demanded of coffee will increase, from 6 to 7 million pounds per year.
B) The demand curve will shift to the right and the quantity demanded will increase to 10 million pounds per year.
C) Both moves, from A to B and then from B to C, will occur simultaneously.
D) It is possible that the market demand will show the move fro A to B, or that it moves directly from A to C.

Question

Figure 2.1.2
-Refer to Figure 2.1.2. If the price of coffee decreases, from $7.50 to $6.00 per pound, which of the following will occur?
A) The quantity demanded of coffee will increase, from 6 to 7 million pounds per year. 
B) The demand curve will shift to the right and the quantity demanded will increase to 10 million pounds per year. 
C) Both moves, from A to B and then from B to C, will occur simultaneously. 
D) It is possible that the market demand will show the move fro A to B, or that it moves directly from A to C.

Quizplus · Accepted Answer

According to the law of demand, as the price of a good decreases, the quantity demanded will increase, assuming all other factors remain constant. Therefore, if the price of coffee decreases from $7.50 to $6.00 per pound, the quantity demanded of coffee will increase, from 6 to 7 million pounds per year. The demand curve will not necessarily shift to the right, as this would imply that other factors besides price have changed, affecting the entire market demand for coffee. Option C is incorrect as it implies both movements will occur, when in reality only the first movement is necessary. Option D is incorrect as it is unclear and does not provide a clear answer.

Figure 2.1.2 -Refer to Figure 2.1.2. If the Price of Coffee Decreases