8. Movements along vs. shifts of demand and supply curves Consider the market demand for peanut butter. Complete the following table by indicating whether an event will cause a movement along the demand curve for peanut butter or a shift of the demand curve for peanut butter, holding all else constant. Event Movement Along Shift A decrease in income of consumers An increase in the price of peanut butter A change in tastes of consumers that makes them desire more peanut butter

8. Movements along vs. shifts of demand and supply curves Consider the market demand for peanut butter. Complete the following table by indicating whether an event will cause a movement along the demand curve for peanut butter or a shift of the demand curve for peanut butter, holding all else constant. Event Movement Along Shift A decrease in income of consumers An increase in the price of peanut butter A change in tastes of consumers that makes them desire more peanut butter

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter4: The Market Forces Of Supply And Demand

Section: Chapter Questions

Problem 3QR

See similar textbooks

Similar questions

Suppose the cross-price elasticity of apples with respect to the price of oranges is 0.4, and the price of oranges falls by 3. What will happen to the demand for apples?
Consider the demand for hamburgers. If the price of a substitute good (for example, hot dogs) increases and the price of a complement good (for example, hamburger buns) increases, can you tell for sure what will happen to the demand for hamburger? Why or why not? Illustrate your answer with a graph.
If a 10 decrease in the price of one product that you buy causes an 8 increase in quantity demanded of that product, will another 10 decrease in the price cause another 3 increase (no more and no less) in quantity demanded?
What does a downward-sloping demand curve mean about how buyers in a market will react to a higher price?
What is the difference between the demand and the quantity demanded of a product, say milk? Explain in words and show the difference on a graph with a demand curve for milk.
Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?
Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.
Income Effects depend on the income elasticity of demand for each good limit you buy. If one of the goods you buy has a negative income elasticity, that is, it is an inferior good, what must be true of the income elasticity of the other good you buy?