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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.
Other Factors That Shift Demand Curves
Answer to Try It
t-shirts The demand for tires will shift to the left because the price of the complement good-automobiles- has increased.
mustard This is incorrect. Mustard and hot dogs are likely to be complements, so if the price of mustard falls this will likely shift the demand curve for hot dogs to the right, increasing her sales.
hamburgers Correct. Hamburgers and hot dog are likely to be substitutes, so if the price of hamburgers falls this will likely shift the demand curve for hot dogs to the left, decreasing her sales of hot dogs.
The demand for tires will shift to the right because of the income effect. While the income effect is likely to increase demand for automobiles and therefore tires, the effect of a price increase for the complement good automobiles must also be considered.
It is impossible to know with the given information. Correct. The income effect will increase demand for tires, while the increase in the price of automobiles will decrease demand. It is impossible to know at the present time which effect is stronger.
The demand for tires will shift to the left because the price of the complement good-automobiles- has increased. While increasing the price of a complement good would decrease demand for tires, the impact of income on tires and automobiles must also be considered.