Answer to Question #53777 in Economics of Enterprise for Abdulaziz Mohammed

Question

Question 4
a.As the price of oranges rises, the demand for oranges falls, ceteris paribus.” Explain.
b. “The price of a bushel of wheat was $3.00 last month, and $2.50 today. The demand curve for wheat must have shifted leftward between last month and today.” Discuss.

c. Some goods are bought largely because they have ‘snob appeal.’ For example, the residents of Beverly Hills gain prestige by buying expensive items. In fact, they would not buy some items unless they are expensive. The law of demand, which holds that people buy more at lower prices than at higher prices, obviously does not hold for the residents of Beverly Hills. The following rules apply in Beverly Hills: high prices, buy; low prices, don’t buy.” Do you agree? Discuss.