Exhibit 4-2
-Refer to Exhibit 4-2. Which of the following would cause a shift of demand from D' to D?

Question

Exhibit 4-2  
-Refer to Exhibit 4-2. Which of the following would cause a shift of demand from D' to D?

Quizplus · Accepted Answer

A decline in consumers' incomes would cause a shift in demand from D' to D for normal goods because consumers would demand less of the good at any given price. This would result in a leftward shift of the demand curve. An increase in the price of a substitute good (A) would result in a shift of demand from the substitute good to the good in question, increasing demand (a rightward shift). An increase in the number of consumers (B) would also result in an increase in demand (a rightward shift). A decrease in the price of a complementary good (C) would result in an increase in demand for the good in question (a rightward shift). Finally, an increase in consumers' incomes (E) would have a different effect depending on whether the good is a normal or inferior good. If it is a normal good, demand would increase (a rightward shift), while if it is an inferior good, demand would decrease (a leftward shift).