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Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364

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BuyFindarrow_forward

Principles of Economics 2e

2nd Edition
Steven A. Greenlaw; David Shapiro
ISBN: 9781947172364
Textbook Problem

Name some factors that can cause a shift in line demand curve in markets for goods and services.

To determine

What are the factors that cause a shift in the demand curve?

Explanation

The following factor causes a shift in the demand curve:

(a) Change in the income of consumer: When the income of consumer changes, it causes the shift in the demand curve.

  • Normal Good: When the income of a consumer rises, the demand for normal good rises. It shifts the demand curve to the right.
  • Inferior Good: When the income of a consumer rises, the demand for inferior good falls. It shifts the demand curve to the left.

(b) Price of related goods: The price of related goods can shift the demand curve of a product.

  • Substitute goods: These are the goods which can be used in the place of each other. If the price of substitute goods rises (say good ‘y’), the demand for good ‘x’ rises and demand curve for good ‘x’ shifts to the right...

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