Question

These changes will either cause demand to increase (shift right) or decrease (shift left). Use either word as applicable, for the short answer.

1. If the price of a good increases because the demand for it increases, What would you expect the demand for its complement to do?

2. If the demand for coffee beans increases, then what is likely to happen to the demand for land on which to grow coffee?

3. If advertising expenditures for the good being considered are decreased, then demand for the good being considered will likely:

4. Lattes are a relatively expensive coffee drink. However, being a normal good, as consumers’ disposable income increases, the demand for Lattes should:

5. As the supply of tablet computers and e-readers increases relative to the demand for them, what change in demand for printed textbooks (having digital e-book versions) would you expect?

Answer 1

Answer 1) If the price of a good increase because the demand for it increases, What would you expect the demand for its complement to do; Increase and curve will shift right

Explanation- The demand for complement will increase as the price of principal good has increased and people who can't afford it will opt for its complement.

Answer 2) If the demand for coffee beans increases, then what is likely to happen to the demand for land on which to grow coffee increase and the curve will shift right

Explanation- The demand for the land will increase as cultivating coffee due to its higher price will be more profitable.

Answer 3) If advertising expenditures for the good being considered are decreased, then demand for the good being considered will likely increase and the curve will shift right

Explanation- As the advertising expenditure has decreased then the producer will lower its final price which will lead to more consumption of the product.

Answer 4)  Lattes are a relatively expensive coffee drink. However, being a normal good, as consumers’ disposable income increases, the demand for Lattes should increase and the curve will shift right

Explanation- The disposable income is generally spent on leisure and latte being leisure will see high demand when disposable income will increase.

Answer 5) As the supply of tablet computers and e-readers increases relative to the demand for them, what change in demand for printed textbooks (having digital e-book versions) would you expect decrease and curve will shift left.

Explanation- The demand for printed E-book will decrease because the e-readers will be more readily available in the market at lower prices.