FIGURE 4-3

-Refer to Figure 4-3. Starting with initial curves D₀ and S₀, which movement is consistent with a successful advertising campaign that claims wool keeps you warm?

Question

FIGURE 4-3
 
-Refer to Figure 4-3. Starting with initial curves D₀ and S₀, which movement is consistent with a successful advertising campaign that claims wool keeps you warm?

Quizplus · Accepted Answer

Movement from Point A to Point F represents an increase in both demand and price, which is consistent with a successful advertising campaign. This implies that the product (wool) is perceived to have higher value by the consumers, creating an upward shift in the demand curve from D₀ to D₁. As a result, the equilibrium point moves from E₀ to E₁, resulting in a higher price and higher quantity demanded, which is consistent with the claim that wool keeps you warm. Movements to Points D and H represent a decrease in demand or an increase in supply, which is not consistent with a successful advertising campaign. Movement to Point B represents a decrease in both demand and supply, which may result in a lower price and quantity demanded.

FIGURE 4-3 -Refer to Figure 4-3. Starting with Initial Curves D₀ and Initial