Which of the following changes will shift the demand curve for Advil to the left? (a)...

Which of the following changes will shift the demand curve for Advil to the left?

(a) Increase in the price of Advil

(b) Increase in family income

(d) Increase in the price of a complement to Advil 5.

(e) None of the above

Solutions

Expert Solution

The demand curve for Advil to the left when the demand will decline at the given price levels and we wil have a new backward shifted demand curve.

Let us go through each of the options and see what will happen:

The increase in price of Advil will cause the consumer to go on another point at the same demand curve. Thus, no shift involved in this case.

The increase in family income will give consumers more purchasing power through which they can consume more Advil. This will shift the demand curve to the right.

Increase in price of substitute will lead people to substitute that product with Advil. This will also shift the demand curve to the right because there will be a rise in demand in this case.

Complements are consumed together. Now, if the price of complement goes up, its demand goes down. When the demand of complement goes down, the demand for Advil will also go down as these are consumed together. Thus, the demand curve will shift to the left in this case.

Thus, the correct answer is (d) increase in price of complement of Advil.

Rahul Sunny answered 1 year ago

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