Answer to Question #157049 in Macroeconomics for Olga Hernandez

Question

The following graph shows the demand curve for uff, a useful commodity produced on the planet Hermes. The Hermetian currency is the yen. The graph input tool also shows how demand for uff is affected by changes in the average income of Hermetians, as well as the prices of tulg and snick, two other related goods available on the planet

Answer 1

Suppose that the price of a gram of uff decreased from 50 yen to 40 yen. This would cause a Movement along the demand curve and therefore an increase in the quantity of uff demanded.

An increase in average income causes a rightward shift of the demand curve.

When the prices of tulg or snick change, there is a shift of the demand curve for uff. The directions of these changes imply that snick and uff are substitute or complement I.e. consumed together

Suppose price of tulg increases then a rightward shift of uff demand curve denote uff and tulg are substitute goods where if it shifts left then they are consumed together.