Question

Which of the following would result in a movement along the demand curve?

a.

an increase in the prices of inputs in production

b.

a change in preferences

c.

an increase in the price of a substitute in consumption

d.

a decrease in income

Answer 1

Demand Curve : The law of demand can be explained with the help of a demand curve also. When the demand schedule is shown graphically, it is called a demand curve. Demand curve is the graphical representation of the demand curve.

Which of the following would result in a movement along the demand curve?

(a) An increase in the price of inputs in production ( Correct ) : When there is an increase in the price of the inputs in production it will cost an increase in the price of the commodity. When the price of the commodity is increased, it will cause an upward movement along the demand curve. All other option causes shift of the demand curve, while increase in price of commodity will cause movement along the demand curve.

(b) Changes in preferences ( Incorrect ) : Any change in preference will cause a change in the demand for a commodity. Preferences usually relies upon trends in the society. When a customers devoleps taste and preferences for a commodity then the demand curve of such a commodity will shift to the right side.

(c) An increase in price of the substitutes in consumption ( Incorrect ) : Two goods are said to be substitute of each other when one can be used in place of another. If the price of the substitute commodity increases, this will increase the demand for the orginal commodity also. When there is an increase in demand of substitute goods, it will cause the demand curve to shift to the right side.

(d) Decrease in income ( Incorrect ) : Change in income can bring about a change in demand. If the income decreases the demand for the goods will also decreases. When the income decreases, it will cause demand curve to shift to the left side.

Hence, OPTION (a) An increase in the price of inputs in production is correct.