Answer to Question #137811 in Microeconomics for vidya

Question

Explain whether each of the following statements describes a change in demand or a change in quantity demanded, and specify whether each change represents an increase or a decrease.
a. Baby Steps Footwear experiences a 40 percent increase in sales of baby shoes during a 3-day, half-price sale.
b. Tabitha gets a promotion and 15 percent increase in her salary and decides to reward herself by purchasing a new 3-D television.
c. When the price of peaches unexpectedly rises, many consumers choose to purchase plums instead.
d. Due to potential problems with its braking system, Asteriod Motors has experienced a decline in sales of its Galactica automobile.
e. Antonio, an accountant working for the city of Santa Cristina, decides to forego his annual vacation to Hawaii when word leaks out that the city may be cutting all employees’ salaries by 10 percent at the end of the year.

Answer 1

a) The increase in sale is due to a decrease in price, hence it is change in Quantity demanded. This represents Increase in Quantity demanded.

b) The factor responsible for increase in consumption expenditure is increase in income and not price of purchasing the television, hence it is change in demand. This represents Increase in demand.

c) The factor responsible for decrease in consumption of peaches is increase in its prices, hence it is change in Quantity demanded. This represents decrease in Quantity demanded.

d) The factor responsible for the decline in sales is potential problems in it's braking system, hence it is change in Quantity Demanded. This represents decrease in Quantity Demanded.

e) The factor responsible for the forgoing of the job is reduction in salaries of employees, hence it is a change in demand. This represents a decrease in demand.