Figure 10-2

Figure 10-2 represents the demand for ice cream cones.
-Refer to Figure 10-2.When the price of ice cream cones increases from $2 to $3, quantity demanded decreases from 4 ice cream cones to 3 ice cream cones.This change in quantity demanded is due to

Question

Figure 10-2
  
Figure 10-2 represents the demand for ice cream cones.
-Refer to Figure 10-2.When the price of ice cream cones increases from $2 to $3, quantity demanded decreases from 4 ice cream cones to 3 ice cream cones.This change in quantity demanded is due to

Quizplus · Accepted Answer

The decrease in quantity demanded when the price increases indicates a substitution effect, where consumers switch to a lower-priced alternative good. This is consistent with the law of demand, which states that when the price of a good rises, quantity demand falls. The income effect, where a change in price affects consumers' purchasing power and their ability to purchase the good, is not evident in this scenario. The law of diminishing marginal utility and the fact that marginal willingness to pay falls may play a role in shaping the demand curve but are not directly related to the change in quantity demanded due to a price increase.

Figure 10-2 Figure 10-2 Represents the Demand for Ice Cream Cones