Factors Affecting Demand
Read this to learn about how factors that affect demand, such as income and change in tastes, are graphed as shifts of the demand curve. Make sure to answer the "Try It" questions.
The Effect of Income on Demand
Answer to Try It
1.
- Customers' incomes have decreased.
This is correct. Falling incomes would lead to a leftward shift of the demand curve causing less quantity demanded at any given price. - The price of electric drills has increased.
While this would explain the decrease in quantity demanded, it will not have occurred because of a shift in the demand curve, rather movement along the existing curve. - Customers' incomes have increased.
While his event would shift the demand curve, it would cause an increase in quantity demanded at any given price level. Jane Doe has observed a decrease.
2.
- essential
Incorrect. Whether a good is 'essential' or not has no bearing on the evidence presented. - normal
Incorrect. we would expect to see demand increase as incomes rose if potatoes are a normal good. - inferior
Correct. An inverse relationship between demand and incomes is the hallmark of an inferior good.